The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and QUAL is a iShares Large Blend fund. So, what’s the difference between USMV and QUAL? And which fund is better?
USMV and QUAL have the same expense ratio: 0.15%. USMV also has a lower exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than QUAL over the past 7 years.
In this article, we’ll compare USMV vs. QUAL. We’ll look at annual returns and fund composition, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss USMV’s and QUAL’s holdings, performance, and portfolio growth and examine how these affect their overall returns.
Summary
| USMV | QUAL | |
| Name | iShares MSCI USA Min Vol Factor ETF | iShares MSCI USA Quality Factor ETF |
| Category | Large Blend | Large Blend |
| Issuer | iShares | iShares |
| AUM | 27.6B | 23.93B |
| Avg. Return | 13.89% | 13.42% |
| Div. Yield | 1.5% | 1.29% |
| Expense Ratio | 0.15% | 0.15% |
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 MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.
USMV’s dividend yield is 0.21% higher than that of QUAL (1.5% vs. 1.29%). Also, USMV yielded on average 0.47% more per year over the past decade (13.89% vs. 13.42%). USMV and QUAL have the same expense ratio: 0.15%.
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Fund Composition
Industry Exposure
| USMV | QUAL | |
| Technology | 20.53% | 22.52% |
| Industrials | 10.51% | 9.22% |
| Energy | 0.21% | 2.24% |
| Communication Services | 11.03% | 11.44% |
| Utilities | 6.93% | 2.41% |
| Healthcare | 18.42% | 13.22% |
| Consumer Defensive | 12.82% | 8.57% |
| Real Estate | 2.73% | 2.72% |
| Financial Services | 9.65% | 15.87% |
| Consumer Cyclical | 5.53% | 9.43% |
| Basic Materials | 1.65% | 2.35% |
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 MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.
QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.
USMV is 1.99% less exposed to the Technology sector than QUAL (20.53% vs 22.52%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 5.20% higher and 4.25% higher respectively (18.42% vs. 13.22% and 12.82% vs. 8.57%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 4.59% less of the fund’s holdings compared to QUAL (9.91% vs. 14.50%).
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%.
| QUAL Holdings | Weight |
| Facebook Inc Class A | 4.77% |
| Nike Inc Class B | 4.05% |
| Microsoft Corp | 3.54% |
| Apple Inc | 3.52% |
| Johnson & Johnson | 2.99% |
| BlackRock Inc | 2.87% |
| Target Corp | 2.8% |
| Mastercard Inc Class A | 2.72% |
| NVIDIA Corp | 2.71% |
| Alphabet Inc Class A | 2.49% |
QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.
BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.
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Risk Analysis
| USMV | QUAL | |
| Mean Return | 0 | 0 |
| R-squared | 0 | 0 |
| Std. Deviation | 0 | 0 |
| Alpha | 0 | 0 |
| Beta | 0 | 0 |
| Sharpe Ratio | 0 | 0 |
| Treynor Ratio | 0 | 0 |
The iShares MSCI USA Min Vol Factor ETF (USMV) has a R-squared of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Beta is 0 while USMV’s Sharpe Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.
The iShares MSCI USA Quality Factor ETF (QUAL) has a Standard Deviation of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Alpha is 0 while QUAL’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a R-squared of 0.
USMV’s Mean Return is 0.00 points lower than that of QUAL and its R-squared is 0.00 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than QUAL. The Alpha and Beta of USMV are 0.00 points lower and 0.00 points lower than QUAL’s Alpha and Beta.
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Performance
Annual Returns
| Year | USMV | QUAL |
| 2020 | 5.6% | 16.96% |
| 2019 | 27.77% | 34.14% |
| 2018 | 1.36% | -5.77% |
| 2017 | 18.97% | 22.26% |
| 2016 | 10.5% | 9.18% |
| 2015 | 5.5% | 5.56% |
| 2014 | 16.34% | 11.62% |
| 2013 | 25.11% | 0.0% |
| 2012 | 11.04% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
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 QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| USMV | $10,000 | $22,066 | 13.89% |
| QUAL | $10,000 | $23,251 | 13.42% |
A $10,000 investment in USMV would have resulted in a final balance of $22,066. This is a profit of $12,066 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.89%.
With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.
USMV’s CAGR is 0.47 percentage points higher than that of QUAL and as a result, would have yielded $1,185 less on a $10,000 investment. Thus, USMV outperformed QUAL by 0.47% annually.
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