The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and IJR is a iShares Small Blend fund. So, what’s the difference between BND and IJR? And which fund is better?
The expense ratio of BND is 0.03 percentage points lower than IJR’s (0.03% vs. 0.06%). BND is mostly comprised of AAA bonds while IJR has a high exposure to the industrials sector. Overall, BND has provided lower returns than IJR over the past ten years.
In this article, we’ll compare BND vs. IJR. We’ll look at holdings and industry exposure, as well as at their performance and fund composition. Moreover, I’ll also discuss BND’s and IJR’s portfolio growth, risk metrics, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||iShares Core S&P Small-Cap ETF|
|Category||Intermediate-Term Bond||Small Blend|
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 iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
BND’s dividend yield is 1.06% higher than that of IJR (2.02% vs. 0.96%). Also, BND yielded on average 9.87% less per year over the past decade (4.09% vs. 13.97%). The expense ratio of BND is 0.03 percentage points lower than IJR’s (0.03% vs. 0.06%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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.
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Sharpe Ratio of 0.88 with a Standard Deviation of 3.14 and a Treynor Ratio of 2.64. Its Beta is 1.04 while BND’s Alpha is -0.14. Furthermore, the fund has a R-squared of 99.34 and a Mean Return of 0.28.
The iShares Core S&P Small-Cap ETF (IJR) has a Treynor Ratio of 10.77 with a Beta of 1.2 and a Standard Deviation of 18.68. Its Mean Return is 1.21 while IJR’s Alpha is -3.7. Furthermore, the fund has a Sharpe Ratio of 0.74 and a R-squared of 76.03.
BND’s Mean Return is 0.93 points lower than that of IJR and its R-squared is 23.31 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than IJR. The Alpha and Beta of BND are 3.56 points higher and 0.16 points lower than IJR’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% 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 IJR, the end total would have been $38,800. This equates to a $28,800 profit over 11 years and a compound annual growth rate (CAGR) of 13.97%.
BND’s CAGR is 9.87 percentage points lower than that of IJR and as a result, would have yielded $23,344 less on a $10,000 investment. Thus, BND performed worse than IJR by 9.87% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.