The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VB and MTUM? And which fund is better?
The expense ratio of VB is 0.10 percentage points lower than MTUM’s (0.05% vs. 0.15%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than MTUM over the past ten years.
In this article, we’ll compare VB vs. MTUM. We’ll look at portfolio growth and annual returns, as well as at their fund composition and performance. Moreover, I’ll also discuss VB’s and MTUM’s industry exposure, holdings, and risk metrics and examine how these affect their overall returns.
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Summary
| VB | MTUM | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | iShares MSCI USA Momentum Factor ETF |
| Category | Small Blend | Large Growth |
| Issuer | Vanguard | iShares |
| AUM | 137.72B | 14.53B |
| Avg. Return | 14.25% | 17.37% |
| Div. Yield | 1.14% | 0.44% |
| Expense Ratio | 0.05% | 0.15% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The iShares MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.
VB’s dividend yield is 0.70% higher than that of MTUM (1.14% vs. 0.44%). Also, VB yielded on average 3.11% less per year over the past decade (14.25% vs. 17.37%). The expense ratio of VB is 0.10 percentage points lower than MTUM’s (0.05% vs. 0.15%).
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Fund Composition
Industry Exposure
| VB | MTUM | |
| Technology | 16.85% | 15.24% |
| Industrials | 16.11% | 12.47% |
| Energy | 3.67% | 1.77% |
| Communication Services | 2.4% | 13.18% |
| Utilities | 2.19% | 0.19% |
| Healthcare | 14.34% | 6.41% |
| Consumer Defensive | 4.14% | 2.88% |
| Real Estate | 9.56% | 0.43% |
| Financial Services | 13.06% | 34.32% |
| Consumer Cyclical | 13.03% | 9.96% |
| Basic Materials | 4.63% | 3.15% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The iShares MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.
MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.
VB is 1.61% more exposed to the Technology sector than MTUM (16.85% vs 15.24%). VB’s exposure to Industrials and Healthcare stocks is 3.64% higher and 7.93% higher respectively (16.11% vs. 12.47% and 14.34% vs. 6.41%). In total, Communication Services, Energy, and Consumer Defensive also make up 7.62% less of the fund’s holdings compared to MTUM (10.21% vs. 17.83%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| MTUM Holdings | Weight |
| Tesla Inc | 5.63% |
| The Walt Disney Co | 4.39% |
| JPMorgan Chase & Co | 4.35% |
| Berkshire Hathaway Inc Class B | 4.34% |
| Bank of America Corp | 3.81% |
| PayPal Holdings Inc | 3.76% |
| Wells Fargo & Co | 3.05% |
| Applied Materials Inc | 3.05% |
| Moderna Inc | 2.89% |
| Alphabet Inc Class C | 2.84% |
MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.
PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.
Risk Analysis
| VB | MTUM | |
| Mean Return | 1.15 | 0 |
| R-squared | 85.03 | 0 |
| Std. Deviation | 17.82 | 0 |
| Alpha | -4.02 | 0 |
| Beta | 1.21 | 0 |
| Sharpe Ratio | 0.74 | 0 |
| Treynor Ratio | 10.15 | 0 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Alpha of -4.02 with a R-squared of 85.03 and a Mean Return of 1.15. Its Standard Deviation is 17.82 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Treynor Ratio of 10.15 and a Beta of 1.21.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Standard Deviation of 0 with a R-squared of 0 and a Alpha of 0. Its Treynor Ratio is 0 while MTUM’s Sharpe Ratio is 0. Furthermore, the fund has a Beta of 0 and a Mean Return of 0.
VB’s Mean Return is 1.15 points higher than that of MTUM and its R-squared is 85.03 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than MTUM. The Alpha and Beta of VB are 4.02 points lower and 1.21 points higher than MTUM’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | MTUM |
| 2020 | 19.08% | 29.69% |
| 2019 | 27.37% | 27.57% |
| 2018 | -9.3% | -1.77% |
| 2017 | 16.24% | 37.6% |
| 2016 | 18.31% | 4.89% |
| 2015 | -3.65% | 9.12% |
| 2014 | 7.51% | 14.48% |
| 2013 | 37.8% | 0.0% |
| 2012 | 18.22% | 0.0% |
| 2011 | -2.68% | 0.0% |
| 2010 | 27.89% | 0.0% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $19,597 | 14.25% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in VB would have resulted in a final balance of $19,597. This is a profit of $9,597 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.
VB’s CAGR is 3.11 percentage points lower than that of MTUM and as a result, would have yielded $9,704 less on a $10,000 investment. Thus, VB performed worse than MTUM by 3.11% annually.
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