The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and ITOT is a iShares Large Blend fund. So, what’s the difference between BND and ITOT? And which fund is better?
BND and ITOT have the same expense ratio: 0.03%. BND is mostly comprised of AAA bonds while ITOT has a high exposure to the technology sector. Overall, BND has provided lower returns than ITOT over the past ten years.
In this article, we’ll compare BND vs. ITOT. We’ll look at portfolio growth and performance, as well as at their fund composition and annual returns. Moreover, I’ll also discuss BND’s and ITOT’s industry exposure, holdings, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||iShares Core S&P Total U.S. Stock Market ETF|
|Category||Intermediate-Term Bond||Large 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 Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
BND’s dividend yield is 0.82% higher than that of ITOT (2.02% vs. 1.2%). Also, BND yielded on average 10.50% less per year over the past decade (4.09% vs. 14.59%). BND and ITOT have the same expense ratio: 0.03%.
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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.
|Facebook Inc Class A||1.89%|
|Alphabet Inc Class A||1.79%|
|Alphabet Inc Class C||1.71%|
|Berkshire Hathaway Inc Class B||1.17%|
|JPMorgan Chase & Co||1.02%|
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Standard Deviation of 3.14 with a Sharpe Ratio of 0.88 and a Alpha of -0.14. Its R-squared is 99.34 while BND’s Treynor Ratio is 2.64. Furthermore, the fund has a Mean Return of 0.28 and a Beta of 1.04.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Alpha of -0.54 with a Beta of 1.03 and a Treynor Ratio of 14.13. Its Sharpe Ratio is 1.04 while ITOT’s R-squared is 99.4. Furthermore, the fund has a Mean Return of 1.27 and a Standard Deviation of 14.02.
BND’s Mean Return is 0.99 points lower than that of ITOT and its R-squared is 0.06 points lower. With a Standard Deviation of 3.14, BND is slightly less volatile than ITOT. The Alpha and Beta of BND are 0.40 points higher and 0.01 points higher than ITOT’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 ITOT, returning 32.67% on an annual basis. The poorest year for ITOT in the last ten years was 2018, with a yield of -5.27%. Most years the iShares Core S&P Total U.S. Stock Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.01%, 15.98%, and 16.15% 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 ITOT, the end total would have been $42,310. This equates to a $32,310 profit over 11 years and a compound annual growth rate (CAGR) of 14.59%.
BND’s CAGR is 10.50 percentage points lower than that of ITOT and as a result, would have yielded $26,854 less on a $10,000 investment. Thus, BND performed worse than ITOT by 10.50% annually.
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