VTV vs. MTUM: What’s The Difference?

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

The expense ratio of VTV is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%). VTV also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VTV has provided lower returns than MTUM over the past ten years.

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

Summary

VTV MTUM
Name Vanguard Value Index Fund ETF Shares iShares MSCI USA Momentum Factor ETF
Category Large Value Large Growth
Issuer Vanguard iShares
AUM 125.77B 14.53B
Avg. Return 12.07% 17.37%
Div. Yield 2.15% 0.44%
Expense Ratio 0.04% 0.15%

The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% 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%.

VTV’s dividend yield is 1.71% higher than that of MTUM (2.15% vs. 0.44%). Also, VTV yielded on average 5.29% less per year over the past decade (12.07% vs. 17.37%). The expense ratio of VTV is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%).

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Fund Composition

Industry Exposure

VTV vs. MTUM - Industry Exposure

VTV MTUM
Technology 7.86% 15.24%
Industrials 12.61% 12.47%
Energy 5.59% 1.77%
Communication Services 5.49% 13.18%
Utilities 5.37% 0.19%
Healthcare 19.84% 6.41%
Consumer Defensive 10.72% 2.88%
Real Estate 3.01% 0.43%
Financial Services 22.81% 34.32%
Consumer Cyclical 3.79% 9.96%
Basic Materials 2.91% 3.15%

The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.

VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.

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%.

VTV is 11.51% less exposed to the Financial Services sector than MTUM (22.81% vs 34.32%). VTV’s exposure to Healthcare and Industrials stocks is 13.43% higher and 0.14% higher respectively (19.84% vs. 6.41% and 12.61% vs. 12.47%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 1.59% more of the fund’s holdings compared to MTUM (12.17% vs. 10.58%).

Holdings

VTV - Holdings

VTV Holdings Weight
Berkshire Hathaway Inc Class B 2.98%
JPMorgan Chase & Co 2.82%
Johnson & Johnson 2.6%
UnitedHealth Group Inc 2.27%
Procter & Gamble Co 1.98%
Bank of America Corp 1.91%
Exxon Mobil Corp 1.6%
Comcast Corp Class A 1.57%
Intel Corp 1.36%
Verizon Communications Inc 1.32%

VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.

Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.

MTUM - Holdings

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%.

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Risk Analysis

VTV MTUM
Mean Return 1.05 0
R-squared 92.61 0
Std. Deviation 13.78 0
Alpha -1.92 0
Beta 0.98 0
Sharpe Ratio 0.87 0
Treynor Ratio 11.94 0

The Vanguard Value Index Fund ETF Shares (VTV) has a R-squared of 92.61 with a Sharpe Ratio of 0.87 and a Alpha of -1.92. Its Beta is 0.98 while VTV’s Treynor Ratio is 11.94. Furthermore, the fund has a Standard Deviation of 13.78 and a Mean Return of 1.05.

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

VTV’s Mean Return is 1.05 points higher than that of MTUM and its R-squared is 92.61 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than MTUM. The Alpha and Beta of VTV are 1.92 points lower and 0.98 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. MTUM - Annual Returns

Year VTV MTUM
2020 2.23% 29.69%
2019 25.85% 27.57%
2018 -5.39% -1.77%
2017 17.12% 37.6%
2016 16.88% 4.89%
2015 -0.89% 9.12%
2014 13.19% 14.48%
2013 33.03% 0.0%
2012 15.19% 0.0%
2011 1.16% 0.0%
2010 14.45% 0.0%

VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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

VTV vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $18,692 12.07%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in VTV would have resulted in a final balance of $18,692. This is a profit of $8,692 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

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%.

VTV’s CAGR is 5.29 percentage points lower than that of MTUM and as a result, would have yielded $10,609 less on a $10,000 investment. Thus, VTV performed worse than MTUM by 5.29% annually.


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