The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and IVE is a iShares Large Value fund. So, what’s the difference between BND and IVE? And which fund is better?
The expense ratio of BND is 0.15 percentage points lower than IVE’s (0.03% vs. 0.18%). BND is mostly comprised of AAA bonds while IVE has a high exposure to the financial services sector. Overall, BND has provided lower returns than IVE over the past ten years.
In this article, we’ll compare BND vs. IVE. We’ll look at performance and industry exposure, as well as at their annual returns and holdings. Moreover, I’ll also discuss BND’s and IVE’s fund composition, portfolio growth, and risk metrics and examine how these affect their overall returns.
Summary
| BND | IVE | |
| Name | Vanguard Total Bond Market Index Fund ETF Shares | iShares S&P 500 Value ETF |
| Category | Intermediate-Term Bond | Large Value |
| Issuer | Vanguard | iShares |
| AUM | 312.15B | 22.4B |
| Avg. Return | 4.09% | 11.68% |
| Div. Yield | 2.02% | 1.88% |
| Expense Ratio | 0.03% | 0.18% |
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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
BND’s dividend yield is 0.14% higher than that of IVE (2.02% vs. 1.88%). Also, BND yielded on average 7.59% less per year over the past decade (4.09% vs. 11.68%). The expense ratio of BND is 0.15 percentage points lower than IVE’s (0.03% vs. 0.18%).
Fund Composition
Holdings
| BND Bond Sectors | Weight |
| AAA | 68.72% |
| BBB | 16.17% |
| A | 11.87% |
| AA | 3.34% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
| 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.
| IVE Holdings | Weight |
| Berkshire Hathaway Inc Class B | 3.05% |
| JPMorgan Chase & Co | 2.65% |
| The Walt Disney Co | 1.85% |
| Bank of America Corp | 1.67% |
| Johnson & Johnson | 1.57% |
| Exxon Mobil Corp | 1.41% |
| Pfizer Inc | 1.38% |
| Cisco Systems Inc | 1.35% |
| Verizon Communications Inc | 1.33% |
| Intel Corp | 1.25% |
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
Risk Analysis
| BND | IVE | |
| Mean Return | 0.28 | 1.05 |
| R-squared | 99.34 | 92.08 |
| Std. Deviation | 3.14 | 14.3 |
| Alpha | -0.14 | -2.9 |
| Beta | 1.04 | 1.01 |
| Sharpe Ratio | 0.88 | 0.83 |
| Treynor Ratio | 2.64 | 11.41 |
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Standard Deviation of 3.14 with a Mean Return of 0.28 and a Beta of 1.04. Its Alpha is -0.14 while BND’s Treynor Ratio is 2.64. Furthermore, the fund has a Sharpe Ratio of 0.88 and a R-squared of 99.34.
The iShares S&P 500 Value ETF (IVE) has a Alpha of -2.9 with a Treynor Ratio of 11.41 and a Standard Deviation of 14.3. Its Sharpe Ratio is 0.83 while IVE’s Mean Return is 1.05. Furthermore, the fund has a Beta of 1.01 and a R-squared of 92.08.
BND’s Mean Return is 0.77 points lower than that of IVE and its R-squared is 7.26 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than IVE. The Alpha and Beta of BND are 2.76 points higher and 0.03 points higher than IVE’s Alpha and Beta.
Performance
Annual Returns
| Year | BND | IVE |
| 2020 | 7.71% | 1.24% |
| 2019 | 8.71% | 31.71% |
| 2018 | -0.04% | -9.09% |
| 2017 | 3.62% | 15.19% |
| 2016 | 2.57% | 17.17% |
| 2015 | 0.39% | -3.24% |
| 2014 | 5.96% | 12.14% |
| 2013 | -2.14% | 31.69% |
| 2012 | 4.04% | 17.45% |
| 2011 | 7.71% | -0.63% |
| 2010 | 6.51% | 14.9% |
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 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BND | $10,000 | $15,456 | 4.09% |
| IVE | $10,000 | $31,350 | 11.68% |
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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
BND’s CAGR is 7.59 percentage points lower than that of IVE and as a result, would have yielded $15,894 less on a $10,000 investment. Thus, BND performed worse than IVE by 7.59% annually.
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