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BND vs. IJR: What’s The Difference?

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.

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Summary

BNDIJR
NameVanguard Total Bond Market Index Fund ETF SharesiShares Core S&P Small-Cap ETF
CategoryIntermediate-Term BondSmall Blend
IssuerVanguardiShares
AUM312.15B68.64B
Avg. Return4.09%13.97%
Div. Yield2.02%0.96%
Expense Ratio0.03%0.06%

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%).

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Fund Composition

Holdings

BND - Holdings

BND Bond SectorsWeight
AAA68.72%
BBB16.17%
A11.87%
AA3.34%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%
Others-0.11%

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.

IJR - Holdings

IJR HoldingsWeight
BlackRock Cash Funds Treasury SL Agency1.08%
GameStop Corp Class A0.86%
Omnicell Inc0.61%
Stamps.com Inc0.58%
Saia Inc0.57%
Power Integrations Inc0.57%
Exponent Inc0.54%
NeoGenomics Inc0.53%
Chart Industries Inc0.53%
Macy’s Inc0.51%

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%.

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Risk Analysis

BNDIJR
Mean Return0.281.21
R-squared99.3476.03
Std. Deviation3.1418.68
Alpha-0.14-3.7
Beta1.041.2
Sharpe Ratio0.880.74
Treynor Ratio2.6410.77

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.

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Performance

Annual Returns

BND vs. IJR - Annual Returns

YearBNDIJR
20207.71%11.24%
20198.71%22.79%
2018-0.04%-8.43%
20173.62%13.2%
20162.57%26.49%
20150.39%-2.0%
20145.96%5.67%
2013-2.14%41.36%
20124.04%16.28%
20117.71%0.9%
20106.51%26.14%

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.

Portfolio Growth

BND vs. IJR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BND$10,000$15,4564.09%
IJR$10,000$38,80013.97%

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.


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