The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and IWB is a iShares Large Blend fund. So, what’s the difference between BND and IWB? And which fund is better?
The expense ratio of BND is 0.12 percentage points lower than IWB’s (0.03% vs. 0.15%). BND is mostly comprised of AAA bonds while IWB has a high exposure to the technology sector. Overall, BND has provided lower returns than IWB over the past ten years.
In this article, we’ll compare BND vs. IWB. We’ll look at annual returns and fund composition, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss BND’s and IWB’s holdings, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||iShares Russell 1000 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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
BND’s dividend yield is 0.88% higher than that of IWB (2.02% vs. 1.14%). Also, BND yielded on average 10.54% less per year over the past decade (4.09% vs. 14.64%). The expense ratio of BND is 0.12 percentage points lower than IWB’s (0.03% vs. 0.15%).
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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||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|JPMorgan Chase & Co||1.09%|
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Alpha of -0.14 with a Treynor Ratio of 2.64 and a Beta of 1.04. Its Sharpe Ratio is 0.88 while BND’s R-squared is 99.34. Furthermore, the fund has a Mean Return of 0.28 and a Standard Deviation of 3.14.
The iShares Russell 1000 ETF (IWB) has a Alpha of -0.38 with a Standard Deviation of 13.87 and a Sharpe Ratio of 1.05. Its Mean Return is 1.27 while IWB’s Treynor Ratio is 14.31. Furthermore, the fund has a R-squared of 99.73 and a Beta of 1.02.
BND’s Mean Return is 0.99 points lower than that of IWB and its R-squared is 0.39 points lower. With a Standard Deviation of 3.14, BND is slightly less volatile than IWB. The Alpha and Beta of BND are 0.24 points higher and 0.02 points higher than IWB’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 IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% 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 IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.
BND’s CAGR is 10.54 percentage points lower than that of IWB and as a result, would have yielded $27,006 less on a $10,000 investment. Thus, BND performed worse than IWB by 10.54% annually.
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