The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between BND and VEU? And which fund is better?
The expense ratio of BND is 0.05 percentage points lower than VEU’s (0.03% vs. 0.08%). BND is mostly comprised of AAA bonds while VEU has a high exposure to the financial services sector. Overall, BND has provided lower returns than VEU over the past ten years.
In this article, we’ll compare BND vs. VEU. We’ll look at industry exposure and risk metrics, as well as at their holdings and annual returns. Moreover, I’ll also discuss BND’s and VEU’s portfolio growth, performance, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||Vanguard FTSE All-World ex-US Index Fund ETF Shares|
|Category||Intermediate-Term Bond||Foreign 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 Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
BND’s dividend yield is 0.29% lower than that of VEU (2.02% vs. 2.31%). Also, BND yielded on average 2.54% less per year over the past decade (4.09% vs. 6.64%). The expense ratio of BND is 0.05 percentage points lower than VEU’s (0.03% vs. 0.08%).
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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.
|Tencent Holdings Ltd||1.57%|
|Alibaba Group Holding Ltd Ordinary Shares||1.4%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.98%|
|ASML Holding NV||0.95%|
|Taiwan Semiconductor Manufacturing Co Ltd ADR||0.91%|
|Roche Holding AG||0.91%|
|Toyota Motor Corp||0.75%|
|LVMH Moet Hennessy Louis Vuitton SE||0.68%|
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
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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 Treynor Ratio of 2.64. Its R-squared is 99.34 while BND’s Sharpe Ratio is 0.88. Furthermore, the fund has a Standard Deviation of 3.14 and a Mean Return of 0.28.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Mean Return of 0.56 with a Treynor Ratio of 5.12 and a Alpha of 0.28. Its Beta is 0.99 while VEU’s Standard Deviation is 15.08. Furthermore, the fund has a R-squared of 98.44 and a Sharpe Ratio of 0.4.
BND’s Mean Return is 0.28 points lower than that of VEU and its R-squared is 0.90 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than VEU. The Alpha and Beta of BND are 0.42 points lower and 0.05 points higher than VEU’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 2017 was the strongest year for VEU, returning 27.27% on an annual basis. The poorest year for VEU in the last ten years was 2011, with a yield of -14.25%. Most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares has given investors modest returns, such as in 2016, 2020, and 2010, when gains were 4.77%, 11.39%, and 11.85% 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 VEU, the end total would have been $18,507. This equates to a $8,507 profit over 11 years and a compound annual growth rate (CAGR) of 6.64%.
BND’s CAGR is 2.54 percentage points lower than that of VEU and as a result, would have yielded $3,051 less on a $10,000 investment. Thus, BND performed worse than VEU by 2.54% annually.
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