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.

Summary

USMV VBR
Name iShares MSCI USA Min Vol Factor ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Large Blend Small Value
Issuer iShares Vanguard
AUM 27.6B 48.08B
Avg. Return 13.89% 12.28%
Div. Yield 1.5% 1.6%
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 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%).

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Fund Composition

Industry Exposure

USMV vs. VBR - Industry Exposure

USMV VBR
Technology 20.53% 8.39%
Industrials 10.51% 18.44%
Energy 0.21% 5.15%
Communication Services 11.03% 1.77%
Utilities 6.93% 3.65%
Healthcare 18.42% 7.16%
Consumer Defensive 12.82% 4.36%
Real Estate 2.73% 10.92%
Financial Services 9.65% 20.04%
Consumer Cyclical 5.53% 13.82%
Basic Materials 1.65% 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 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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

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%.

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Risk Analysis

USMV VBR
Mean Return 0 1.08
R-squared 0 82.2
Std. Deviation 0 18.37
Alpha 0 -5.09
Beta 0 1.23
Sharpe Ratio 0 0.67
Treynor Ratio 0 9.15

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.

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Performance

Annual Returns

USMV vs. VBR - Annual Returns

Year USMV VBR
2020 5.6% 5.82%
2019 27.77% 22.76%
2018 1.36% -12.22%
2017 18.97% 11.79%
2016 10.5% 24.8%
2015 5.5% -4.67%
2014 16.34% 10.55%
2013 25.11% 36.57%
2012 11.04% 18.78%
2011 0.0% -4.05%
2010 0.0% 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

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
VBR $10,000 $22,897 12.28%

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.


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