The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VBK and MTUM? And which fund is better?
The expense ratio of VBK is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%). VBK also has a higher exposure to the technology sector and a higher standard deviation. Overall, VBK has provided lower returns than MTUM over the past 7 years.
In this article, we’ll compare VBK vs. MTUM. We’ll look at industry exposure and annual returns, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VBK’s and MTUM’s fund composition, risk metrics, and holdings and examine how these affect their overall returns.
Summary
| VBK | MTUM | |
| Name | Vanguard Small-Cap Growth Index Fund ETF Shares | iShares MSCI USA Momentum Factor ETF |
| Category | Small Growth | Large Growth |
| Issuer | Vanguard | iShares |
| AUM | 37.89B | 14.53B |
| Avg. Return | 16.53% | 17.37% |
| Div. Yield | 0.45% | 0.44% |
| Expense Ratio | 0.07% | 0.15% |
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
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%.
VBK’s dividend yield is 0.01% higher than that of MTUM (0.45% vs. 0.44%). Also, VBK yielded on average 0.84% less per year over the past decade (16.53% vs. 17.37%). The expense ratio of VBK is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%).
Fund Composition
Industry Exposure
| VBK | MTUM | |
| Technology | 27.87% | 15.24% |
| Industrials | 13.19% | 12.47% |
| Energy | 1.77% | 1.77% |
| Communication Services | 3.24% | 13.18% |
| Utilities | 0.32% | 0.19% |
| Healthcare | 23.24% | 6.41% |
| Consumer Defensive | 3.83% | 2.88% |
| Real Estate | 7.87% | 0.43% |
| Financial Services | 4.05% | 34.32% |
| Consumer Cyclical | 12.13% | 9.96% |
| Basic Materials | 2.49% | 3.15% |
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
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%.
VBK is 12.63% more exposed to the Technology sector than MTUM (27.87% vs 15.24%). VBK’s exposure to Healthcare and Industrials stocks is 16.83% higher and 0.72% higher respectively (23.24% vs. 6.41% and 13.19% vs. 12.47%). In total, Energy, Basic Materials, and Communication Services also make up 10.60% less of the fund’s holdings compared to MTUM (7.50% vs. 18.10%).
Holdings
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
| 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
| VBK | MTUM | |
| Mean Return | 1.22 | 0 |
| R-squared | 80.56 | 0 |
| Std. Deviation | 17.95 | 0 |
| Alpha | -2.81 | 0 |
| Beta | 1.18 | 0 |
| Sharpe Ratio | 0.78 | 0 |
| Treynor Ratio | 11.18 | 0 |
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a R-squared of 80.56 with a Beta of 1.18 and a Treynor Ratio of 11.18. Its Mean Return is 1.22 while VBK’s Alpha is -2.81. Furthermore, the fund has a Standard Deviation of 17.95 and a Sharpe Ratio of 0.78.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Beta is 0 while MTUM’s Alpha is 0. Furthermore, the fund has a R-squared of 0 and a Standard Deviation of 0.
VBK’s Mean Return is 1.22 points higher than that of MTUM and its R-squared is 80.56 points higher. With a Standard Deviation of 17.95, VBK is slightly more volatile than MTUM. The Alpha and Beta of VBK are 2.81 points lower and 1.18 points higher than MTUM’s Alpha and Beta.
Performance
Annual Returns
| Year | VBK | MTUM |
| 2020 | 35.29% | 29.69% |
| 2019 | 32.75% | 27.57% |
| 2018 | -5.68% | -1.77% |
| 2017 | 21.9% | 37.6% |
| 2016 | 10.74% | 4.89% |
| 2015 | -2.51% | 9.12% |
| 2014 | 4.02% | 14.48% |
| 2013 | 38.18% | 0.0% |
| 2012 | 17.67% | 0.0% |
| 2011 | -1.43% | 0.0% |
| 2010 | 30.87% | 0.0% |
VBK had its best year in 2013 with an annual return of 38.18%. VBK’s worst year over the past decade yielded -5.68% and occurred in 2018. In most years the Vanguard Small-Cap Growth Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2017 where annual returns amounted to 10.74%, 17.67%, and 21.9% 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 |
| VBK | $10,000 | $23,189 | 16.53% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in VBK would have resulted in a final balance of $23,189. This is a profit of $13,189 over 7 years and amounts to a compound annual growth rate (CAGR) of 16.53%.
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%.
VBK’s CAGR is 0.84 percentage points lower than that of MTUM and as a result, would have yielded $6,112 less on a $10,000 investment. Thus, VBK performed worse than MTUM by 0.84% annually.
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