The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between USMV and MUB? And which fund is better?
The expense ratio of USMV is 0.08 percentage points higher than MUB’s (0.15% vs. 0.07%). USMV also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, USMV has provided higher returns than MUB over the past 8 years.
In this article, we’ll compare USMV vs. MUB. We’ll look at performance and fund composition, as well as at their holdings and risk metrics. Moreover, I’ll also discuss USMV’s and MUB’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||iShares MSCI USA Min Vol Factor ETF||iShares National Muni Bond ETF|
|Category||Large Blend||Muni National Interm|
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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.
USMV’s dividend yield is 0.46% lower than that of MUB (1.5% vs. 1.96%). Also, USMV yielded on average 9.86% more per year over the past decade (13.89% vs. 4.04%). The expense ratio of USMV is 0.08 percentage points higher than MUB’s (0.15% vs. 0.07%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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%.
|MUB Bond Sectors||Weight|
MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Mean Return of 0 with a Alpha of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while USMV’s Beta is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.
The iShares National Muni Bond ETF (MUB) has a Standard Deviation of 3.68 with a Treynor Ratio of 3.2 and a Beta of 1.01. Its Sharpe Ratio is 0.88 while MUB’s R-squared is 99. Furthermore, the fund has a Mean Return of 0.32 and a Alpha of -0.46.
USMV’s Mean Return is 0.32 points lower than that of MUB and its R-squared is 99.00 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than MUB. The Alpha and Beta of USMV are 0.46 points higher and 1.01 points lower than MUB’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% 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 MUB, the end total would have been $12,852. This equates to a $2,852 profit over 8 years and a compound annual growth rate (CAGR) of 4.04%.
USMV’s CAGR is 9.86 percentage points higher than that of MUB and as a result, would have yielded $14,755 more on a $10,000 investment. Thus, USMV outperformed MUB by 9.86% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.