The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and IVE is a iShares Large Value fund. So, what’s the difference between USMV and IVE? And which fund is better?
The expense ratio of USMV is 0.03 percentage points lower than IVE’s (0.15% vs. 0.18%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than IVE over the past 8 years.
In this article, we’ll compare USMV vs. IVE. We’ll look at holdings and performance, as well as at their fund composition and annual returns. Moreover, I’ll also discuss USMV’s and IVE’s portfolio growth, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||iShares MSCI USA Min Vol Factor ETF||iShares S&P 500 Value ETF|
|Category||Large Blend||Large Value|
The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
The iShares S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
USMV’s dividend yield is 0.38% lower than that of IVE (1.5% vs. 1.88%). Also, USMV yielded on average 2.21% more per year over the past decade (13.89% vs. 11.68%). The expense ratio of USMV is 0.03 percentage points lower than IVE’s (0.15% vs. 0.18%).
The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
The iShares S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
USMV is 11.12% more exposed to the Technology sector than IVE (20.53% vs 9.41%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 3.02% higher and 3.59% higher respectively (18.42% vs. 15.4% and 12.82% vs. 9.23%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 5.14% less of the fund’s holdings compared to IVE (9.91% vs. 15.05%).
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its R-squared is 0 while USMV’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.
The iShares S&P 500 Value ETF (IVE) has a Beta of 1.01 with a R-squared of 92.08 and a Sharpe Ratio of 0.83. Its Standard Deviation is 14.3 while IVE’s Alpha is -2.9. Furthermore, the fund has a Treynor Ratio of 11.41 and a Mean Return of 1.05.
USMV’s Mean Return is 1.05 points lower than that of IVE and its R-squared is 92.08 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than IVE. The Alpha and Beta of USMV are 2.90 points higher and 1.01 points lower than IVE’s Alpha and Beta.
USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% respectively.
The year 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in USMV would have resulted in a final balance of $27,607. This is a profit of $17,607 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.89%.
With a $10,000 investment in IVE, the end total would have been $23,378. This equates to a $13,378 profit over 8 years and a compound annual growth rate (CAGR) of 11.68%.
USMV’s CAGR is 2.21 percentage points higher than that of IVE and as a result, would have yielded $4,229 more on a $10,000 investment. Thus, USMV outperformed IVE by 2.21% annually.
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