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USMV vs. IWS: What’s The Difference?

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

The expense ratio of USMV is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than IWS over the past 8 years.

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

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Summary

USMVIWS
NameiShares MSCI USA Min Vol Factor ETFiShares Russell Mid-Cap Value ETF
CategoryLarge BlendMid-Cap Value
IssueriSharesiShares
AUM27.6B14.24B
Avg. Return13.89%12.35%
Div. Yield1.5%1.34%
Expense Ratio0.15%0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

USMV’s dividend yield is 0.16% higher than that of IWS (1.5% vs. 1.34%). Also, USMV yielded on average 1.55% more per year over the past decade (13.89% vs. 12.35%). The expense ratio of USMV is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%).

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Fund Composition

Industry Exposure

USMV vs. IWS - Industry Exposure

USMVIWS
Technology20.53%11.39%
Industrials10.51%14.6%
Energy0.21%4.71%
Communication Services11.03%4.08%
Utilities6.93%6.97%
Healthcare18.42%8.56%
Consumer Defensive12.82%4.76%
Real Estate2.73%11.71%
Financial Services9.65%15.75%
Consumer Cyclical5.53%12.07%
Basic Materials1.65%5.4%

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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

USMV is 9.14% more exposed to the Technology sector than IWS (20.53% vs 11.39%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 9.86% higher and 8.06% higher respectively (18.42% vs. 8.56% and 12.82% vs. 4.76%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 19.27% less of the fund’s holdings compared to IWS (9.91% vs. 29.18%).

Holdings

USMV - Holdings

USMV HoldingsWeight
Eli Lilly and Co1.64%
Microsoft Corp1.62%
T-Mobile US Inc1.51%
Accenture PLC Class A1.51%
Visa Inc Class A1.49%
Waste Management Inc1.45%
Adobe Inc1.45%
The Kroger Co1.44%
Johnson & Johnson1.42%
Gilead Sciences Inc1.42%

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

USMVIWS
Mean Return01.06
R-squared087.04
Std. Deviation016.03
Alpha0-4.11
Beta01.1
Sharpe Ratio00.75
Treynor Ratio010.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Alpha of -4.11 with a Mean Return of 1.06 and a R-squared of 87.04. Its Sharpe Ratio is 0.75 while IWS’s Standard Deviation is 16.03. Furthermore, the fund has a Treynor Ratio of 10.3 and a Beta of 1.1.

USMV’s Mean Return is 1.06 points lower than that of IWS and its R-squared is 87.04 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than IWS. The Alpha and Beta of USMV are 4.11 points higher and 1.10 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. IWS - Annual Returns

YearUSMVIWS
20205.6%4.76%
201927.77%26.78%
20181.36%-12.36%
201718.97%13.1%
201610.5%19.69%
20155.5%-4.93%
201416.34%14.49%
201325.11%33.11%
201211.04%18.27%
20110.0%-1.55%
20100.0%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

USMV vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
USMV$10,000$27,60713.89%
IWS$10,000$22,82912.35%

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 IWS, the end total would have been $22,829. This equates to a $12,829 profit over 8 years and a compound annual growth rate (CAGR) of 12.35%.

USMV’s CAGR is 1.55 percentage points higher than that of IWS and as a result, would have yielded $4,778 more on a $10,000 investment. Thus, USMV outperformed IWS by 1.55% annually.


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