USMV vs. MUB: What’s The Difference?

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.

Summary

USMV MUB
Name iShares MSCI USA Min Vol Factor ETF iShares National Muni Bond ETF
Category Large Blend Muni National Interm
Issuer iShares iShares
AUM 27.6B 22.71B
Avg. Return 13.89% 4.04%
Div. Yield 1.5% 1.96%
Expense Ratio 0.15% 0.07%

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%).

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Fund Composition

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%.

MUB - Holdings

MUB Bond Sectors Weight
AA 60.38%
AAA 18.39%
A 15.04%
BBB 6.0%
Others 0.17%
BB 0.02%
Below B 0.0%
B 0.0%
US Government 0.0%

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.

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Risk Analysis

USMV MUB
Mean Return 0 0.32
R-squared 0 99
Std. Deviation 0 3.68
Alpha 0 -0.46
Beta 0 1.01
Sharpe Ratio 0 0.88
Treynor Ratio 0 3.2

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.

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Performance

Annual Returns

USMV vs. MUB - Annual Returns

Year USMV MUB
2020 5.6% 4.87%
2019 27.77% 7.28%
2018 1.36% 0.86%
2017 18.97% 4.61%
2016 10.5% 0.06%
2015 5.5% 2.99%
2014 16.34% 8.61%
2013 25.11% -3.26%
2012 11.04% 6.14%
2011 0.0% 10.85%
2010 0.0% 1.4%

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.

Portfolio Growth

USMV vs. MUB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
MUB $10,000 $12,852 4.04%

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.


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