USMV vs. VOE: What’s The Difference?

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

The expense ratio of USMV is 0.08 percentage points higher than VOE’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 VOE over the past 8 years.

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

Summary

USMV VOE
Name iShares MSCI USA Min Vol Factor ETF Vanguard Mid-Cap Value Index Fund ETF Shares
Category Large Blend Mid-Cap Value
Issuer iShares Vanguard
AUM 27.6B 26.78B
Avg. Return 13.89% 12.52%
Div. Yield 1.5% 1.87%
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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

USMV’s dividend yield is 0.37% lower than that of VOE (1.5% vs. 1.87%). Also, USMV yielded on average 1.37% more per year over the past decade (13.89% vs. 12.52%). The expense ratio of USMV is 0.08 percentage points higher than VOE’s (0.15% vs. 0.07%).

Fund Composition

Industry Exposure

USMV vs. VOE - Industry Exposure

USMV VOE
Technology 20.53% 9.85%
Industrials 10.51% 9.4%
Energy 0.21% 5.69%
Communication Services 11.03% 5.27%
Utilities 6.93% 10.93%
Healthcare 18.42% 7.04%
Consumer Defensive 12.82% 4.85%
Real Estate 2.73% 11.48%
Financial Services 9.65% 18.26%
Consumer Cyclical 5.53% 11.8%
Basic Materials 1.65% 5.44%

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 Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

USMV is 10.68% more exposed to the Technology sector than VOE (20.53% vs 9.85%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 11.38% higher and 7.97% higher respectively (18.42% vs. 7.04% and 12.82% vs. 4.85%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 18.81% less of the fund’s holdings compared to VOE (9.91% vs. 28.72%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

Risk Analysis

USMV VOE
Mean Return 0 1.05
R-squared 0 88.76
Std. Deviation 0 15.98
Alpha 0 -3.77
Beta 0 1.11
Sharpe Ratio 0 0.75
Treynor Ratio 0 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Sharpe Ratio of 0.75 with a Treynor Ratio of 10.19 and a Standard Deviation of 15.98. Its Alpha is -3.77 while VOE’s Mean Return is 1.05. Furthermore, the fund has a Beta of 1.11 and a R-squared of 88.76.

USMV’s Mean Return is 1.05 points lower than that of VOE and its R-squared is 88.76 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than VOE. The Alpha and Beta of USMV are 3.77 points higher and 1.11 points lower than VOE’s Alpha and Beta.

Performance

Annual Returns

USMV vs. VOE - Annual Returns

Year USMV VOE
2020 5.6% 2.5%
2019 27.77% 27.98%
2018 1.36% -12.41%
2017 18.97% 17.05%
2016 10.5% 15.26%
2015 5.5% -1.8%
2014 16.34% 13.98%
2013 25.11% 37.65%
2012 11.04% 16.04%
2011 0.0% -0.32%
2010 0.0% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

USMV vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
VOE $10,000 $23,882 12.52%

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 VOE, the end total would have been $23,882. This equates to a $13,882 profit over 8 years and a compound annual growth rate (CAGR) of 12.52%.

USMV’s CAGR is 1.37 percentage points higher than that of VOE and as a result, would have yielded $3,725 more on a $10,000 investment. Thus, USMV outperformed VOE by 1.37% annually.


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