The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between BND and SDY? And which fund is better?
The expense ratio of BND is 0.32 percentage points lower than SDY’s (0.03% vs. 0.35%). BND is mostly comprised of AAA bonds while SDY has a high exposure to the financial services sector. Overall, BND has provided lower returns than SDY over the past ten years.
In this article, we’ll compare BND vs. SDY. We’ll look at annual returns and industry exposure, as well as at their fund composition and performance. Moreover, I’ll also discuss BND’s and SDY’s holdings, portfolio growth, and risk metrics and examine how these affect their overall returns.
Summary
| BND | SDY | |
| Name | Vanguard Total Bond Market Index Fund ETF Shares | SPDR S&P Dividend ETF |
| Category | Intermediate-Term Bond | Large Value |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 312.15B | 19.67B |
| Avg. Return | 4.09% | 12.44% |
| Div. Yield | 2.02% | 2.65% |
| Expense Ratio | 0.03% | 0.35% |
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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
BND’s dividend yield is 0.63% lower than that of SDY (2.02% vs. 2.65%). Also, BND yielded on average 8.34% less per year over the past decade (4.09% vs. 12.44%). The expense ratio of BND is 0.32 percentage points lower than SDY’s (0.03% vs. 0.35%).
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.
| SDY Holdings | Weight |
| Exxon Mobil Corp | 2.81% |
| AT&T Inc | 2.5% |
| South Jersey Industries Inc | 2.22% |
| Chevron Corp | 2.02% |
| International Business Machines Corp | 2.0% |
| AbbVie Inc | 1.93% |
| National Retail Properties Inc | 1.86% |
| Federal Realty Investment Trust | 1.77% |
| Realty Income Corp | 1.7% |
| Old Republic International Corp | 1.65% |
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
Risk Analysis
| BND | SDY | |
| Mean Return | 0.28 | 1.07 |
| R-squared | 99.34 | 83.62 |
| Std. Deviation | 3.14 | 12.9 |
| Alpha | -0.14 | -0.1 |
| Beta | 1.04 | 0.87 |
| Sharpe Ratio | 0.88 | 0.95 |
| Treynor Ratio | 2.64 | 13.94 |
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Sharpe Ratio of 0.88 with a R-squared of 99.34 and a Mean Return of 0.28. Its Alpha is -0.14 while BND’s Treynor Ratio is 2.64. Furthermore, the fund has a Beta of 1.04 and a Standard Deviation of 3.14.
The SPDR S&P Dividend ETF (SDY) has a R-squared of 83.62 with a Beta of 0.87 and a Treynor Ratio of 13.94. Its Mean Return is 1.07 while SDY’s Sharpe Ratio is 0.95. Furthermore, the fund has a Standard Deviation of 12.9 and a Alpha of -0.1.
BND’s Mean Return is 0.79 points lower than that of SDY and its R-squared is 15.72 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than SDY. The Alpha and Beta of BND are 0.04 points lower and 0.17 points higher than SDY’s Alpha and Beta.
Performance
Annual Returns
| Year | BND | SDY |
| 2020 | 7.71% | 1.78% |
| 2019 | 8.71% | 23.37% |
| 2018 | -0.04% | -2.73% |
| 2017 | 3.62% | 15.84% |
| 2016 | 2.57% | 20.17% |
| 2015 | 0.39% | -0.7% |
| 2014 | 5.96% | 13.8% |
| 2013 | -2.14% | 30.09% |
| 2012 | 4.04% | 11.51% |
| 2011 | 7.71% | 7.28% |
| 2010 | 6.51% | 16.41% |
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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BND | $10,000 | $15,456 | 4.09% |
| SDY | $10,000 | $34,806 | 12.44% |
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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.
BND’s CAGR is 8.34 percentage points lower than that of SDY and as a result, would have yielded $19,350 less on a $10,000 investment. Thus, BND performed worse than SDY by 8.34% annually.
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