The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between BND and DIA? And which fund is better?
The expense ratio of BND is 0.13 percentage points lower than DIA’s (0.03% vs. 0.16%). BND is mostly comprised of AAA bonds while DIA has a high exposure to the financial services sector. Overall, BND has provided lower returns than DIA over the past ten years.
In this article, we’ll compare BND vs. DIA. We’ll look at portfolio growth and annual returns, as well as at their fund composition and performance. Moreover, I’ll also discuss BND’s and DIA’s holdings, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||SPDR Dow Jones Industrial Average ETF Trust|
|Category||Intermediate-Term Bond||Large Value|
|Issuer||Vanguard||SPDR State Street Global Advisors|
The Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B 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 1.61% with an expense ratio of 0.16%.
BND’s dividend yield is 0.41% higher than that of DIA (2.02% vs. 1.61%). Also, BND yielded on average 9.26% less per year over the past decade (4.09% vs. 13.35%). The expense ratio of BND is 0.13 percentage points lower than DIA’s (0.03% vs. 0.16%).
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|BND Bond Sectors||Weight|
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
|UnitedHealth Group Inc||7.63%|
|Goldman Sachs Group Inc||7.23%|
|The Home Depot Inc||6.07%|
|Visa Inc Class A||4.45%|
|Honeywell International Inc||4.18%|
DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.
Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Treynor Ratio of 2.64 with a Mean Return of 0.28 and a Beta of 1.04. Its Alpha is -0.14 while BND’s Standard Deviation is 3.14. Furthermore, the fund has a Sharpe Ratio of 0.88 and a R-squared of 99.34.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Sharpe Ratio of 0.94 with a Alpha of -0.94 and a Beta of 0.97. Its Standard Deviation is 13.68 while DIA’s Treynor Ratio is 13.07. Furthermore, the fund has a R-squared of 93.31 and a Mean Return of 1.13.
BND’s Mean Return is 0.85 points lower than that of DIA and its R-squared is 6.03 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than DIA. The Alpha and Beta of BND are 0.80 points higher and 0.07 points higher than DIA’s Alpha and Beta.
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BND had its best year in 2019 with an annual return of 8.71%. BND’s worst year over the past decade yielded -2.14% and occurred in 2013. In most years the Vanguard Total Bond Market Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.62%, 4.04%, and 5.96% respectively.
The year 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BND would have resulted in a final balance of $15,456. This is a profit of $5,456 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.09%.
With a $10,000 investment in DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.
BND’s CAGR is 9.26 percentage points lower than that of DIA and as a result, would have yielded $22,509 less on a $10,000 investment. Thus, BND performed worse than DIA by 9.26% annually.
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