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VBR vs. MTUM: What’s The Difference?

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VBR and MTUM? And which fund is better?

The expense ratio of VBR is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%). VBR also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided lower returns than MTUM over the past 7 years.

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

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Summary

VBRMTUM
NameVanguard Small-Cap Value Index Fund ETF SharesiShares MSCI USA Momentum Factor ETF
CategorySmall ValueLarge Growth
IssuerVanguardiShares
AUM48.08B14.53B
Avg. Return12.28%17.37%
Div. Yield1.6%0.44%
Expense Ratio0.07%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%.

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%.

VBR’s dividend yield is 1.16% higher than that of MTUM (1.6% vs. 0.44%). Also, VBR yielded on average 5.09% less per year over the past decade (12.28% vs. 17.37%). The expense ratio of VBR is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%).

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Fund Composition

Industry Exposure

VBR vs. MTUM - Industry Exposure

VBRMTUM
Technology8.39%15.24%
Industrials18.44%12.47%
Energy5.15%1.77%
Communication Services1.77%13.18%
Utilities3.65%0.19%
Healthcare7.16%6.41%
Consumer Defensive4.36%2.88%
Real Estate10.92%0.43%
Financial Services20.04%34.32%
Consumer Cyclical13.82%9.96%
Basic Materials6.31%3.15%

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%.

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%.

VBR is 14.28% less exposed to the Financial Services sector than MTUM (20.04% vs 34.32%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 5.97% higher and 3.86% higher respectively (18.44% vs. 12.47% and 13.82% vs. 9.96%). In total, Utilities, Consumer Defensive, and Energy also make up 8.32% more of the fund’s holdings compared to MTUM (13.16% vs. 4.84%).

Holdings

VBR - Holdings

VBR HoldingsWeight
Diamondback Energy Inc0.55%
VICI Properties Inc Ordinary Shares0.54%
IDEX Corp0.54%
Nuance Communications Inc0.5%
Molina Healthcare Inc0.48%
Signature Bank0.46%
Novavax Inc0.44%
Howmet Aerospace Inc0.44%
Apollo Global Management Inc Class A0.42%
Brown & Brown Inc0.41%

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%.

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

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%.

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Risk Analysis

VBRMTUM
Mean Return1.080
R-squared82.20
Std. Deviation18.370
Alpha-5.090
Beta1.230
Sharpe Ratio0.670
Treynor Ratio9.150

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Sharpe Ratio of 0.67 with a Mean Return of 1.08 and a Beta of 1.23. Its Standard Deviation is 18.37 while VBR’s Treynor Ratio is 9.15. Furthermore, the fund has a R-squared of 82.2 and a Alpha of -5.09.

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

VBR’s Mean Return is 1.08 points higher than that of MTUM and its R-squared is 82.20 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than MTUM. The Alpha and Beta of VBR are 5.09 points lower and 1.23 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. MTUM - Annual Returns

YearVBRMTUM
20205.82%29.69%
201922.76%27.57%
2018-12.22%-1.77%
201711.79%37.6%
201624.8%4.89%
2015-4.67%9.12%
201410.55%14.48%
201336.57%0.0%
201218.78%0.0%
2011-4.05%0.0%
201024.97%0.0%

VBR had its best year in 2013 with an annual return of 36.57%. VBR’s worst year over the past decade yielded -12.22% and occurred in 2018. In most years the Vanguard Small-Cap Value Index Fund ETF Shares provided moderate returns such as in 2014, 2017, and 2012 where annual returns amounted to 10.55%, 11.79%, and 18.78% 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

VBR vs. MTUM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VBR$10,000$16,76512.28%
MTUM$10,000$29,30117.37%

A $10,000 investment in VBR would have resulted in a final balance of $16,765. This is a profit of $6,765 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.28%.

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%.

VBR’s CAGR is 5.09 percentage points lower than that of MTUM and as a result, would have yielded $12,536 less on a $10,000 investment. Thus, VBR performed worse than MTUM by 5.09% annually.


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