USMV vs. IWN: What’s The Difference?

The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between USMV and IWN? And which fund is better?

The expense ratio of USMV is 0.09 percentage points lower than IWN’s (0.15% vs. 0.24%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than IWN over the past 8 years.

In this article, we’ll compare USMV vs. IWN. We’ll look at annual returns and risk metrics, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss USMV’s and IWN’s performance, holdings, and industry exposure and examine how these affect their overall returns.

Summary

USMV IWN
Name iShares MSCI USA Min Vol Factor ETF iShares Russell 2000 Value ETF
Category Large Blend Small Value
Issuer iShares iShares
AUM 27.6B 15.48B
Avg. Return 13.89% 10.96%
Div. Yield 1.5% 1.26%
Expense Ratio 0.15% 0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

USMV’s dividend yield is 0.24% higher than that of IWN (1.5% vs. 1.26%). Also, USMV yielded on average 2.93% more per year over the past decade (13.89% vs. 10.96%). The expense ratio of USMV is 0.09 percentage points lower than IWN’s (0.15% vs. 0.24%).

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Fund Composition

Industry Exposure

USMV vs. IWN - Industry Exposure

USMV IWN
Technology 20.53% 6.02%
Industrials 10.51% 14.58%
Energy 0.21% 5.84%
Communication Services 11.03% 4.17%
Utilities 6.93% 4.69%
Healthcare 18.42% 10.94%
Consumer Defensive 12.82% 3.77%
Real Estate 2.73% 14.36%
Financial Services 9.65% 22.97%
Consumer Cyclical 5.53% 8.39%
Basic Materials 1.65% 4.29%

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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

USMV is 14.51% more exposed to the Technology sector than IWN (20.53% vs 6.02%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 7.48% higher and 9.05% higher respectively (18.42% vs. 10.94% and 12.82% vs. 3.77%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 17.13% less of the fund’s holdings compared to IWN (9.91% vs. 27.04%).

Holdings

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe 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%.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

USMV IWN
Mean Return 0 1.01
R-squared 0 72.64
Std. Deviation 0 19.28
Alpha 0 -6.32
Beta 0 1.21
Sharpe Ratio 0 0.59
Treynor Ratio 0 8.3

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Beta of 0 with a Alpha of 0 and a R-squared of 0. Its Treynor Ratio is 0 while USMV’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.

The iShares Russell 2000 Value ETF (IWN) has a Mean Return of 1.01 with a Beta of 1.21 and a Alpha of -6.32. Its Standard Deviation is 19.28 while IWN’s R-squared is 72.64. Furthermore, the fund has a Treynor Ratio of 8.3 and a Sharpe Ratio of 0.59.

USMV’s Mean Return is 1.01 points lower than that of IWN and its R-squared is 72.64 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than IWN. The Alpha and Beta of USMV are 6.32 points higher and 1.21 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. IWN - Annual Returns

Year USMV IWN
2020 5.6% 4.5%
2019 27.77% 22.17%
2018 1.36% -12.94%
2017 18.97% 7.73%
2016 10.5% 31.64%
2015 5.5% -7.53%
2014 16.34% 4.13%
2013 25.11% 34.3%
2012 11.04% 17.92%
2011 0.0% -5.64%
2010 0.0% 24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

USMV vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
IWN $10,000 $20,383 10.96%

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 IWN, the end total would have been $20,383. This equates to a $10,383 profit over 8 years and a compound annual growth rate (CAGR) of 10.96%.

USMV’s CAGR is 2.93 percentage points higher than that of IWN and as a result, would have yielded $7,224 more on a $10,000 investment. Thus, USMV outperformed IWN by 2.93% annually.


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