The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between USMV and MBB? And which fund is better?
The expense ratio of USMV is 0.09 percentage points higher than MBB’s (0.15% vs. 0.06%). USMV also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, USMV has provided higher returns than MBB over the past 8 years.
In this article, we’ll compare USMV vs. MBB. We’ll look at fund composition and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss USMV’s and MBB’s industry exposure, risk metrics, and performance and examine how these affect their overall returns.
|Name||iShares MSCI USA Min Vol Factor ETF||iShares MBS ETF|
|Category||Large Blend||Intermediate Government|
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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
USMV’s dividend yield is 0.38% lower than that of MBB (1.5% vs. 1.88%). Also, USMV yielded on average 10.82% more per year over the past decade (13.89% vs. 3.08%). The expense ratio of USMV is 0.09 percentage points higher than MBB’s (0.15% vs. 0.06%).
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|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%.
|MBB Bond Sectors||Weight|
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The iShares MSCI USA Min Vol Factor ETF (USMV) has a R-squared of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its Treynor Ratio is 0 while USMV’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a Alpha of 0.14 and a R-squared of 74.38. Its Sharpe Ratio is 0.87 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Beta of 0.6 and a Standard Deviation of 2.12.
USMV’s Mean Return is 0.20 points lower than that of MBB and its R-squared is 74.38 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than MBB. The Alpha and Beta of USMV are 0.14 points lower and 0.60 points lower than MBB’s Alpha and Beta.
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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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% 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 MBB, the end total would have been $12,185. This equates to a $2,185 profit over 8 years and a compound annual growth rate (CAGR) of 3.08%.
USMV’s CAGR is 10.82 percentage points higher than that of MBB and as a result, would have yielded $15,422 more on a $10,000 investment. Thus, USMV outperformed MBB by 10.82% annually.
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