The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VIG and MTUM? And which fund is better?
The expense ratio of VIG is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%). VIG also has a higher exposure to the industrials sector and a higher standard deviation. Overall, VIG has provided lower returns than MTUM over the past ten years.
In this article, we’ll compare VIG vs. MTUM. We’ll look at holdings and performance, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VIG’s and MTUM’s industry exposure, fund composition, and portfolio growth and examine how these affect their overall returns.
Summary
| VIG | MTUM | |
| Name | Vanguard Dividend Appreciation Index Fund ETF Shares | iShares MSCI USA Momentum Factor ETF |
| Category | Large Blend | Large Growth |
| Issuer | Vanguard | iShares |
| AUM | 71.92B | 14.53B |
| Avg. Return | 13.35% | 17.37% |
| Div. Yield | 1.56% | 0.44% |
| Expense Ratio | 0.06% | 0.15% |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
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%.
VIG’s dividend yield is 1.12% higher than that of MTUM (1.56% vs. 0.44%). Also, VIG yielded on average 4.02% less per year over the past decade (13.35% vs. 17.37%). The expense ratio of VIG is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%).
Fund Composition
Industry Exposure
| VIG | MTUM | |
| Technology | 14.93% | 15.24% |
| Industrials | 17.23% | 12.47% |
| Energy | 0.0% | 1.77% |
| Communication Services | 2.86% | 13.18% |
| Utilities | 2.81% | 0.19% |
| Healthcare | 15.52% | 6.41% |
| Consumer Defensive | 15.32% | 2.88% |
| Real Estate | 0.0% | 0.43% |
| Financial Services | 17.18% | 34.32% |
| Consumer Cyclical | 10.47% | 9.96% |
| Basic Materials | 3.67% | 3.15% |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
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%.
VIG is 4.76% more exposed to the Industrials sector than MTUM (17.23% vs 12.47%). VIG’s exposure to Financial Services and Healthcare stocks is 17.14% lower and 9.11% higher respectively (17.18% vs. 34.32% and 15.52% vs. 6.41%). In total, Energy, Utilities, and Communication Services also make up 9.47% less of the fund’s holdings compared to MTUM (5.67% vs. 15.14%).
Holdings
| VIG Holdings | Weight |
| Microsoft Corp | 4.19% |
| JPMorgan Chase & Co | 3.8% |
| Johnson & Johnson | 3.67% |
| Walmart Inc | 3.38% |
| Visa Inc Class A | 3.22% |
| UnitedHealth Group Inc | 3.22% |
| The Home Depot Inc | 2.91% |
| Procter & Gamble Co | 2.82% |
| Comcast Corp Class A | 2.21% |
| Coca-Cola Co | 1.98% |
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
| 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
| VIG | MTUM | |
| Mean Return | 1.09 | 0 |
| R-squared | 92.2 | 0 |
| Std. Deviation | 12.25 | 0 |
| Alpha | 0.12 | 0 |
| Beta | 0.86 | 0 |
| Sharpe Ratio | 1.01 | 0 |
| Treynor Ratio | 14.33 | 0 |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a R-squared of 92.2 with a Treynor Ratio of 14.33 and a Standard Deviation of 12.25. Its Alpha is 0.12 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Beta of 0.86 and a Mean Return of 1.09.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Sharpe Ratio of 0 with a Beta of 0 and a Alpha of 0. Its R-squared is 0 while MTUM’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
VIG’s Mean Return is 1.09 points higher than that of MTUM and its R-squared is 92.20 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than MTUM. The Alpha and Beta of VIG are 0.12 points higher and 0.86 points higher than MTUM’s Alpha and Beta.
Performance
Annual Returns
| Year | VIG | MTUM |
| 2020 | 15.46% | 29.69% |
| 2019 | 29.71% | 27.57% |
| 2018 | -2.02% | -1.77% |
| 2017 | 22.22% | 37.6% |
| 2016 | 11.84% | 4.89% |
| 2015 | -1.95% | 9.12% |
| 2014 | 10.06% | 14.48% |
| 2013 | 28.99% | 0.0% |
| 2012 | 11.61% | 0.0% |
| 2011 | 6.21% | 0.0% |
| 2010 | 14.67% | 0.0% |
VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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 |
| VIG | $10,000 | $21,645 | 13.35% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in VIG would have resulted in a final balance of $21,645. This is a profit of $11,645 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
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%.
VIG’s CAGR is 4.02 percentage points lower than that of MTUM and as a result, would have yielded $7,656 less on a $10,000 investment. Thus, VIG performed worse than MTUM by 4.02% annually.
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