The iShares MSCI USA Min Vol Factor ETF (USMV) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and VT is a Vanguard N/A fund. So, what’s the difference between USMV and VT? And which fund is better?
The expense ratio of USMV is 0.07 percentage points higher than VT’s (0.15% vs. 0.08%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than VT over the past 8 years.
In this article, we’ll compare USMV vs. VT. We’ll look at risk metrics and portfolio growth, as well as at their holdings and fund composition. Moreover, I’ll also discuss USMV’s and VT’s annual returns, industry exposure, and performance and examine how these affect their overall returns.
Summary
| USMV | VT | |
| NameiShares MSCI USA Min Vol Factor ETFVanguard Total World Stock Index Fund ETF Shares | ||
| Category | Large Blend | N/A |
| Issuer | iShares | Vanguard |
| AUM | 27.6B | 30.44B |
| Avg. Return | 13.89% | 10.42% |
| Div. Yield | 1.5% | 1.65% |
| Expense Ratio | 0.15% | 0.08% |
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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
USMV’s dividend yield is 0.15% lower than that of VT (1.5% vs. 1.65%). Also, USMV yielded on average 3.48% more per year over the past decade (13.89% vs. 10.42%). The expense ratio of USMV is 0.07 percentage points higher than VT’s (0.15% vs. 0.08%).
Fund Composition
Industry Exposure
| USMV | VT | |
| Technology | 20.53% | 19.63% |
| Industrials | 10.51% | 10.7% |
| Energy | 0.21% | 3.48% |
| Communication Services | 11.03% | 9.02% |
| Utilities | 6.93% | 2.6% |
| Healthcare | 18.42% | 11.58% |
| Consumer Defensive | 12.82% | 6.71% |
| Real Estate | 2.73% | 3.64% |
| Financial Services | 9.65% | 15.36% |
| Consumer Cyclical | 5.53% | 12.32% |
| Basic Materials | 1.65% | 4.97% |
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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
USMV is 0.90% more exposed to the Technology sector than VT (20.53% vs 19.63%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 6.84% higher and 6.11% higher respectively (18.42% vs. 11.58% and 12.82% vs. 6.71%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 11.02% less of the fund’s holdings compared to VT (9.91% vs. 20.93%).
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%.
| VT Holdings | Weight |
| Apple Inc | 2.85% |
| Microsoft Corp | 2.71% |
| Amazon.com Inc | 1.98% |
| Facebook Inc Class A | 1.1% |
| Alphabet Inc Class A | 0.97% |
| Alphabet Inc Class C | 0.95% |
| Tesla Inc | 0.7% |
| NVIDIA Corp | 0.64% |
| JPMorgan Chase & Co | 0.62% |
| Tencent Holdings Ltd | 0.6% |
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
Risk Analysis
| USMV | VT | |
| Mean Return | 0 | 0.9 |
| R-squared | 0 | 99.35 |
| Std. Deviation | 0 | 14.19 |
| Alpha | 0 | 0.2 |
| Beta | 0 | 1.01 |
| Sharpe Ratio | 0 | 0.71 |
| Treynor Ratio | 0 | 9.5 |
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Beta is 0 while USMV’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Mean Return of 0.9 and a Alpha of 0.2. Its Treynor Ratio is 9.5 while VT’s Standard Deviation is 14.19. Furthermore, the fund has a Sharpe Ratio of 0.71 and a R-squared of 99.35.
USMV’s Mean Return is 0.90 points lower than that of VT and its R-squared is 99.35 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than VT. The Alpha and Beta of USMV are 0.20 points lower and 1.01 points lower than VT’s Alpha and Beta.
Performance
Annual Returns
| Year | USMV | VT |
| 2020 | 5.6% | 16.74% |
| 2019 | 27.77% | 26.8% |
| 2018 | 1.36% | -9.67% |
| 2017 | 18.97% | 24.19% |
| 2016 | 10.5% | 8.77% |
| 2015 | 5.5% | -1.88% |
| 2014 | 16.34% | 3.97% |
| 2013 | 25.11% | 22.98% |
| 2012 | 11.04% | 17.33% |
| 2011 | 0.0% | -7.71% |
| 2010 | 0.0% | 13.05% |
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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| USMV | $10,000 | $27,607 | 13.89% |
| VT | $10,000 | $22,660 | 10.42% |
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 VT, the end total would have been $22,660. This equates to a $12,660 profit over 8 years and a compound annual growth rate (CAGR) of 10.42%.
USMV’s CAGR is 3.48 percentage points higher than that of VT and as a result, would have yielded $4,947 more on a $10,000 investment. Thus, USMV outperformed VT by 3.48% annually.
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