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BND vs. VB: What’s The Difference?

The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and VB is a Vanguard Small Blend fund. So, what’s the difference between BND and VB? And which fund is better?

The expense ratio of BND is 0.02 percentage points lower than VB’s (0.03% vs. 0.05%). BND is mostly comprised of AAA bonds while VB has a high exposure to the technology sector. Overall, BND has provided lower returns than VB over the past ten years.

In this article, we’ll compare BND vs. VB. We’ll look at portfolio growth and industry exposure, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss BND’s and VB’s holdings, performance, and annual returns and examine how these affect their overall returns.

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Summary

BNDVB
NameVanguard Total Bond Market Index Fund ETF SharesVanguard Small-Cap Index Fund ETF Shares
CategoryIntermediate-Term BondSmall Blend
IssuerVanguardVanguard
AUM312.15B137.72B
Avg. Return4.09%14.25%
Div. Yield2.02%1.14%
Expense Ratio0.03%0.05%

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 Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.

BND’s dividend yield is 0.88% higher than that of VB (2.02% vs. 1.14%). Also, BND yielded on average 10.16% less per year over the past decade (4.09% vs. 14.25%). The expense ratio of BND is 0.02 percentage points lower than VB’s (0.03% vs. 0.05%).

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Fund Composition

Holdings

BND - Holdings

BND Bond SectorsWeight
AAA68.72%
BBB16.17%
A11.87%
AA3.34%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%
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.

VB - Holdings

VB HoldingsWeight
Charles River Laboratories International Inc0.34%
Pool Corp0.32%
Bio-Techne Corp0.32%
Avantor Inc0.32%
PerkinElmer Inc0.31%
Diamondback Energy Inc0.31%
VICI Properties Inc Ordinary Shares0.3%
IDEX Corp0.3%
Entegris Inc0.3%
Novavax Inc0.29%

VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.

Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.

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Risk Analysis

BNDVB
Mean Return0.281.15
R-squared99.3485.03
Std. Deviation3.1417.82
Alpha-0.14-4.02
Beta1.041.21
Sharpe Ratio0.880.74
Treynor Ratio2.6410.15

The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Beta of 1.04 with a Alpha of -0.14 and a Mean Return of 0.28. Its Sharpe Ratio is 0.88 while BND’s Treynor Ratio is 2.64. Furthermore, the fund has a Standard Deviation of 3.14 and a R-squared of 99.34.

The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Sharpe Ratio of 0.74 and a Treynor Ratio of 10.15. Its Mean Return is 1.15 while VB’s R-squared is 85.03. Furthermore, the fund has a Alpha of -4.02 and a Standard Deviation of 17.82.

BND’s Mean Return is 0.87 points lower than that of VB and its R-squared is 14.31 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than VB. The Alpha and Beta of BND are 3.88 points higher and 0.17 points lower than VB’s Alpha and Beta.

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Performance

Annual Returns

BND vs. VB - Annual Returns

YearBNDVB
20207.71%19.08%
20198.71%27.37%
2018-0.04%-9.3%
20173.62%16.24%
20162.57%18.31%
20150.39%-3.65%
20145.96%7.51%
2013-2.14%37.8%
20124.04%18.22%
20117.71%-2.68%
20106.51%27.89%

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 VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.

Portfolio Growth

BND vs. VB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BND$10,000$15,4564.09%
VB$10,000$39,73414.25%

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 VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.

BND’s CAGR is 10.16 percentage points lower than that of VB and as a result, would have yielded $24,278 less on a $10,000 investment. Thus, BND performed worse than VB by 10.16% annually.


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