The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between BND and VOE? And which fund is better?
The expense ratio of BND is 0.04 percentage points lower than VOE’s (0.03% vs. 0.07%). BND is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, BND has provided lower returns than VOE over the past ten years.
In this article, we’ll compare BND vs. VOE. We’ll look at industry exposure and portfolio growth, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss BND’s and VOE’s performance, holdings, and fund composition and examine how these affect their overall returns.
Summary
| BND | VOE | |
| Name | Vanguard Total Bond Market Index Fund ETF Shares | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Intermediate-Term Bond | Mid-Cap Value |
| Issuer | Vanguard | Vanguard |
| AUM | 312.15B | 26.78B |
| Avg. Return | 4.09% | 12.52% |
| Div. Yield | 2.02% | 1.87% |
| Expense Ratio | 0.03% | 0.07% |
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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
BND’s dividend yield is 0.15% higher than that of VOE (2.02% vs. 1.87%). Also, BND yielded on average 8.43% less per year over the past decade (4.09% vs. 12.52%). The expense ratio of BND is 0.04 percentage points lower than VOE’s (0.03% vs. 0.07%).
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.
| VOE Holdings | Weight |
| Carrier Global Corp Ordinary Shares | 1.28% |
| International Flavors & Fragrances Inc | 1.13% |
| Motorola Solutions Inc | 1.12% |
| Discover Financial Services | 1.09% |
| Welltower Inc | 1.05% |
| Corteva Inc | 0.99% |
| Valero Energy Corp | 0.97% |
| Corning Inc | 0.95% |
| Willis Towers Watson PLC | 0.9% |
| D.R. Horton Inc | 0.89% |
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
Risk Analysis
| BND | VOE | |
| Mean Return | 0.28 | 1.05 |
| R-squared | 99.34 | 88.76 |
| Std. Deviation | 3.14 | 15.98 |
| Alpha | -0.14 | -3.77 |
| Beta | 1.04 | 1.11 |
| Sharpe Ratio | 0.88 | 0.75 |
| Treynor Ratio | 2.64 | 10.19 |
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Treynor Ratio of 2.64 with a Mean Return of 0.28 and a Beta of 1.04. Its Alpha is -0.14 while BND’s R-squared is 99.34. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Standard Deviation of 3.14.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Treynor Ratio of 10.19 with a Mean Return of 1.05 and a R-squared of 88.76. Its Alpha is -3.77 while VOE’s Sharpe Ratio is 0.75. Furthermore, the fund has a Standard Deviation of 15.98 and a Beta of 1.11.
BND’s Mean Return is 0.77 points lower than that of VOE and its R-squared is 10.58 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than VOE. The Alpha and Beta of BND are 3.63 points higher and 0.07 points lower than VOE’s Alpha and Beta.
Performance
Annual Returns
| Year | BND | VOE |
| 2020 | 7.71% | 2.5% |
| 2019 | 8.71% | 27.98% |
| 2018 | -0.04% | -12.41% |
| 2017 | 3.62% | 17.05% |
| 2016 | 2.57% | 15.26% |
| 2015 | 0.39% | -1.8% |
| 2014 | 5.96% | 13.98% |
| 2013 | -2.14% | 37.65% |
| 2012 | 4.04% | 16.04% |
| 2011 | 7.71% | -0.32% |
| 2010 | 6.51% | 21.83% |
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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BND | $10,000 | $15,456 | 4.09% |
| VOE | $10,000 | $33,655 | 12.52% |
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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.
BND’s CAGR is 8.43 percentage points lower than that of VOE and as a result, would have yielded $18,199 less on a $10,000 investment. Thus, BND performed worse than VOE by 8.43% annually.
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