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VGK vs. MTUM: What’s The Difference?

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

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

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

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Summary

VGKMTUM
NameVanguard FTSE Europe Index Fund ETF SharesiShares MSCI USA Momentum Factor ETF
CategoryEurope StockLarge Growth
IssuerVanguardiShares
AUM25.7B14.53B
Avg. Return6.68%17.37%
Div. Yield2.52%0.44%
Expense Ratio0.08%0.15%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

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%.

VGK’s dividend yield is 2.08% higher than that of MTUM (2.52% vs. 0.44%). Also, VGK yielded on average 10.69% less per year over the past decade (6.68% vs. 17.37%). The expense ratio of VGK is 0.07 percentage points lower than MTUM’s (0.08% vs. 0.15%).

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Fund Composition

Industry Exposure

VGK vs. MTUM - Industry Exposure

VGKMTUM
Technology8.3%15.24%
Industrials15.58%12.47%
Energy4.3%1.77%
Communication Services5.09%13.18%
Utilities3.89%0.19%
Healthcare13.76%6.41%
Consumer Defensive11.39%2.88%
Real Estate2.57%0.43%
Financial Services15.85%34.32%
Consumer Cyclical11.6%9.96%
Basic Materials7.67%3.15%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

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%.

VGK is 18.47% less exposed to the Financial Services sector than MTUM (15.85% vs 34.32%). VGK’s exposure to Industrials and Healthcare stocks is 3.11% higher and 7.35% higher respectively (15.58% vs. 12.47% and 13.76% vs. 6.41%). In total, Utilities, Energy, and Communication Services also make up 1.86% less of the fund’s holdings compared to MTUM (13.28% vs. 15.14%).

Holdings

VGK - Holdings

VGK HoldingsWeight
Nestle SA2.82%
ASML Holding NV2.2%
Roche Holding AG2.13%
LVMH Moet Hennessy Louis Vuitton SE1.58%
Novartis AG1.55%
AstraZeneca PLC1.27%
SAP SE1.25%
Unilever PLC1.23%
Novo Nordisk A/S B1.09%
Siemens AG0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

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

VGKMTUM
Mean Return0.610
R-squared92.760
Std. Deviation16.650
Alpha0.450
Beta1.060
Sharpe Ratio0.40
Treynor Ratio5.120

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Alpha of 0.45 with a Sharpe Ratio of 0.4 and a Treynor Ratio of 5.12. Its Beta is 1.06 while VGK’s Mean Return is 0.61. Furthermore, the fund has a Standard Deviation of 16.65 and a R-squared of 92.76.

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

VGK’s Mean Return is 0.61 points higher than that of MTUM and its R-squared is 92.76 points higher. With a Standard Deviation of 16.65, VGK is slightly more volatile than MTUM. The Alpha and Beta of VGK are 0.45 points higher and 1.06 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

VGK vs. MTUM - Annual Returns

YearVGKMTUM
20206.5%29.69%
201924.26%27.57%
2018-14.79%-1.77%
201727.06%37.6%
2016-0.59%4.89%
2015-1.87%9.12%
2014-6.56%14.48%
201324.93%0.0%
201221.01%0.0%
2011-11.49%0.0%
20105.01%0.0%

VGK had its best year in 2017 with an annual return of 27.06%. VGK’s worst year over the past decade yielded -14.79% and occurred in 2018. In most years the Vanguard FTSE Europe Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to -0.59%, 5.01%, and 6.5% 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

VGK vs. MTUM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGK$10,000$13,0606.68%
MTUM$10,000$29,30117.37%

A $10,000 investment in VGK would have resulted in a final balance of $13,060. This is a profit of $3,060 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.68%.

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%.

VGK’s CAGR is 10.69 percentage points lower than that of MTUM and as a result, would have yielded $16,241 less on a $10,000 investment. Thus, VGK performed worse than MTUM by 10.69% annually.


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