The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VUG and MTUM? And which fund is better?
The expense ratio of VUG is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than MTUM over the past ten years.
In this article, we’ll compare VUG vs. MTUM. We’ll look at portfolio growth and performance, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VUG’s and MTUM’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares MSCI USA Momentum Factor ETF|
|Category||Large Growth||Large Growth|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% 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%.
VUG’s dividend yield is 0.13% higher than that of MTUM (0.57% vs. 0.44%). Also, VUG yielded on average 0.21% more per year over the past decade (17.58% vs. 17.37%). The expense ratio of VUG is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%).
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The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
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%.
VUG is 23.81% more exposed to the Technology sector than MTUM (39.05% vs 15.24%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 7.82% higher and 3.31% higher respectively (17.78% vs. 9.96% and 16.49% vs. 13.18%). In total, Energy, Basic Materials, and Consumer Defensive also make up 3.55% less of the fund’s holdings compared to MTUM (4.25% vs. 7.80%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|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 Growth Index Fund ETF Shares (VUG) has a Treynor Ratio of 16.13 with a Alpha of 1.81 and a Beta of 1.04. Its Mean Return is 1.44 while VUG’s Standard Deviation is 14.76. Furthermore, the fund has a Sharpe Ratio of 1.13 and a R-squared of 92.48.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Mean Return of 0 with a R-squared of 0 and a Sharpe Ratio of 0. Its Treynor Ratio is 0 while MTUM’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.
VUG’s Mean Return is 1.44 points higher than that of MTUM and its R-squared is 92.48 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than MTUM. The Alpha and Beta of VUG are 1.81 points higher and 1.04 points higher than MTUM’s Alpha and Beta.
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VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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 VUG would have resulted in a final balance of $29,615. This is a profit of $19,615 over 7 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
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%.
VUG’s CAGR is 0.21 percentage points higher than that of MTUM and as a result, would have yielded $314 more on a $10,000 investment. Thus, VUG outperformed MTUM by 0.21% annually.
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