The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VO and MTUM? And which fund is better?
The expense ratio of VO is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than MTUM over the past ten years.
In this article, we’ll compare VO vs. MTUM. We’ll look at holdings and fund composition, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VO’s and MTUM’s risk metrics, performance, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares MSCI USA Momentum Factor ETF|
|Category||Mid-Cap Blend||Large Growth|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
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%.
VO’s dividend yield is 0.79% higher than that of MTUM (1.23% vs. 0.44%). Also, VO yielded on average 3.03% less per year over the past decade (14.34% vs. 17.37%). The expense ratio of VO is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%).
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
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%.
VO is 6.77% more exposed to the Technology sector than MTUM (22.01% vs 15.24%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 6.62% higher and 2.16% higher respectively (13.03% vs. 6.41% and 12.12% vs. 9.96%). In total, Basic Materials, Energy, and Utilities also make up 7.19% more of the fund’s holdings compared to MTUM (12.30% vs. 5.11%).
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|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%|
|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%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Treynor Ratio of 11.32 and a Sharpe Ratio of 0.83. Its Standard Deviation is 15.65 while VO’s Alpha is -2.71. Furthermore, the fund has a Mean Return of 1.14 and a Beta of 1.11.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Mean Return of 0 with a Sharpe Ratio of 0 and a R-squared of 0. Its Standard Deviation is 0 while MTUM’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
VO’s Mean Return is 1.14 points higher than that of MTUM and its R-squared is 92.22 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than MTUM. The Alpha and Beta of VO are 2.71 points lower and 1.11 points higher than MTUM’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $20,938. This is a profit of $10,938 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
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%.
VO’s CAGR is 3.03 percentage points lower than that of MTUM and as a result, would have yielded $8,363 less on a $10,000 investment. Thus, VO performed worse than MTUM by 3.03% annually.
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