Skip to content

USMV vs. VBR: What’s The Difference?

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

The expense ratio of USMV is 0.08 percentage points higher than VBR’s (0.15% vs. 0.07%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than VBR over the past 8 years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

USMVVBR
NameiShares MSCI USA Min Vol Factor ETFVanguard Small-Cap Value Index Fund ETF Shares
CategoryLarge BlendSmall Value
IssueriSharesVanguard
AUM27.6B48.08B
Avg. Return13.89%12.28%
Div. Yield1.5%1.6%
Expense Ratio0.15%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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

USMV’s dividend yield is 0.10% lower than that of VBR (1.5% vs. 1.6%). Also, USMV yielded on average 1.61% more per year over the past decade (13.89% vs. 12.28%). The expense ratio of USMV is 0.08 percentage points higher than VBR’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).

Fund Composition

Industry Exposure

USMV vs. VBR - Industry Exposure

USMVVBR
Technology20.53%8.39%
Industrials10.51%18.44%
Energy0.21%5.15%
Communication Services11.03%1.77%
Utilities6.93%3.65%
Healthcare18.42%7.16%
Consumer Defensive12.82%4.36%
Real Estate2.73%10.92%
Financial Services9.65%20.04%
Consumer Cyclical5.53%13.82%
Basic Materials1.65%6.31%

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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

USMV is 12.14% more exposed to the Technology sector than VBR (20.53% vs 8.39%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 11.26% higher and 8.46% higher respectively (18.42% vs. 7.16% and 12.82% vs. 4.36%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 21.14% less of the fund’s holdings compared to VBR (9.91% vs. 31.05%).

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%.

VBR - Holdings

VBR HoldingsWeight
Diamondback Energy Inc0.55%
VICI Properties Inc Ordinary Shares0.54%
IDEX Corp0.54%
Nuance Communications Inc0.5%
Molina Healthcare Inc0.48%
Signature Bank0.46%
Novavax Inc0.44%
Howmet Aerospace Inc0.44%
Apollo Global Management Inc Class A0.42%
Brown & Brown Inc0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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).

Risk Analysis

USMVVBR
Mean Return01.08
R-squared082.2
Std. Deviation018.37
Alpha0-5.09
Beta01.23
Sharpe Ratio00.67
Treynor Ratio09.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a Alpha of -5.09 and a Sharpe Ratio of 0.67. Its Treynor Ratio is 9.15 while VBR’s R-squared is 82.2. Furthermore, the fund has a Standard Deviation of 18.37 and a Mean Return of 1.08.

USMV’s Mean Return is 1.08 points lower than that of VBR and its R-squared is 82.20 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than VBR. The Alpha and Beta of USMV are 5.09 points higher and 1.23 points lower than VBR’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!

Performance

Annual Returns

USMV vs. VBR - Annual Returns

YearUSMVVBR
20205.6%5.82%
201927.77%22.76%
20181.36%-12.22%
201718.97%11.79%
201610.5%24.8%
20155.5%-4.67%
201416.34%10.55%
201325.11%36.57%
201211.04%18.78%
20110.0%-4.05%
20100.0%24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

USMV vs. VBR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
USMV$10,000$27,60713.89%
VBR$10,000$22,89712.28%

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 VBR, the end total would have been $22,897. This equates to a $12,897 profit over 8 years and a compound annual growth rate (CAGR) of 12.28%.

USMV’s CAGR is 1.61 percentage points higher than that of VBR and as a result, would have yielded $4,710 more on a $10,000 investment. Thus, USMV outperformed VBR by 1.61% annually.


Current recommendations:

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.

Leave a Reply

Your email address will not be published. Required fields are marked *