The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between BND and MUB? And which fund is better?
The expense ratio of BND is 0.04 percentage points lower than MUB’s (0.03% vs. 0.07%). BND is mostly comprised of AAA bonds and MUB has a high exposure to AA bond. Overall, BND has provided higher returns than MUB over the past ten years.
In this article, we’ll compare BND vs. MUB. We’ll look at holdings and portfolio growth, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss BND’s and MUB’s fund composition, performance, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||iShares National Muni Bond ETF|
|Category||Intermediate-Term Bond||Muni National Interm|
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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.
BND’s dividend yield is 0.06% higher than that of MUB (2.02% vs. 1.96%). Also, BND yielded on average 0.06% more per year over the past decade (4.09% vs. 4.04%). The expense ratio of BND is 0.04 percentage points lower than MUB’s (0.03% vs. 0.07%).
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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.
|MUB Bond Sectors||Weight|
MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Alpha of -0.14 with a Standard Deviation of 3.14 and a Treynor Ratio of 2.64. Its Sharpe Ratio is 0.88 while BND’s Beta is 1.04. Furthermore, the fund has a Mean Return of 0.28 and a R-squared of 99.34.
The iShares National Muni Bond ETF (MUB) has a Alpha of -0.46 with a Mean Return of 0.32 and a R-squared of 99. Its Beta is 1.01 while MUB’s Standard Deviation is 3.68. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Treynor Ratio of 3.2.
BND’s Mean Return is 0.04 points lower than that of MUB and its R-squared is 0.34 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than MUB. The Alpha and Beta of BND are 0.32 points higher and 0.03 points higher than MUB’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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% 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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.
BND’s CAGR is 0.06 percentage points higher than that of MUB and as a result, would have yielded $123 more on a $10,000 investment. Thus, BND outperformed MUB by 0.06% annually.
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