The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between BND and IWR? And which fund is better?
The expense ratio of BND is 0.16 percentage points lower than IWR’s (0.03% vs. 0.19%). BND is mostly comprised of AAA bonds while IWR has a high exposure to the technology sector. Overall, BND has provided lower returns than IWR over the past ten years.
In this article, we’ll compare BND vs. IWR. We’ll look at industry exposure and risk metrics, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss BND’s and IWR’s annual returns, fund composition, and performance and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||iShares Russell Mid-Cap ETF|
|Category||Intermediate-Term Bond||Mid-Cap 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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
BND’s dividend yield is 1.03% higher than that of IWR (2.02% vs. 0.99%). Also, BND yielded on average 10.06% less per year over the past decade (4.09% vs. 14.15%). The expense ratio of BND is 0.16 percentage points lower than IWR’s (0.03% vs. 0.19%).
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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.
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||0.43%|
|Carrier Global Corp Ordinary Shares||0.43%|
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Alpha of -0.14 with a Beta of 1.04 and a R-squared of 99.34. Its Treynor Ratio is 2.64 while BND’s Standard Deviation is 3.14. Furthermore, the fund has a Mean Return of 0.28 and a Sharpe Ratio of 0.88.
The iShares Russell Mid-Cap ETF (IWR) has a Beta of 1.11 with a Standard Deviation of 15.66 and a Sharpe Ratio of 0.86. Its R-squared is 91.52 while IWR’s Mean Return is 1.17. Furthermore, the fund has a Treynor Ratio of 11.72 and a Alpha of -2.8.
BND’s Mean Return is 0.89 points lower than that of IWR and its R-squared is 7.82 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than IWR. The Alpha and Beta of BND are 2.66 points higher and 0.07 points lower than IWR’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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% 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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
BND’s CAGR is 10.06 percentage points lower than that of IWR and as a result, would have yielded $24,295 less on a $10,000 investment. Thus, BND performed worse than IWR by 10.06% annually.
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