The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between BND and VXF? And which fund is better?
The expense ratio of BND is 0.03 percentage points lower than VXF’s (0.03% vs. 0.06%). BND is mostly comprised of AAA bonds while VXF has a high exposure to the technology sector. Overall, BND has provided lower returns than VXF over the past ten years.
In this article, we’ll compare BND vs. VXF. We’ll look at risk metrics and holdings, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss BND’s and VXF’s fund composition, performance, and portfolio growth and examine how these affect their overall returns.
Summary
| BND | VXF | |
| Name | Vanguard Total Bond Market Index Fund ETF Shares | Vanguard Extended Market Index Fund ETF Shares |
| Category | Intermediate-Term Bond | Mid-Cap Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 312.15B | 114.53B |
| Avg. Return | 4.09% | 15.47% |
| Div. Yield | 2.02% | 1.19% |
| Expense Ratio | 0.03% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
BND’s dividend yield is 0.83% higher than that of VXF (2.02% vs. 1.19%). Also, BND yielded on average 11.38% less per year over the past decade (4.09% vs. 15.47%). The expense ratio of BND is 0.03 percentage points lower than VXF’s (0.03% vs. 0.06%).
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.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| BND | VXF | |
| Mean Return | 0.28 | 1.24 |
| R-squared | 99.34 | 85.73 |
| Std. Deviation | 3.14 | 18.04 |
| Alpha | -0.14 | -3.26 |
| Beta | 1.04 | 1.23 |
| Sharpe Ratio | 0.88 | 0.79 |
| Treynor Ratio | 2.64 | 10.92 |
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 Standard Deviation of 3.14. Its Beta is 1.04 while BND’s R-squared is 99.34. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Alpha of -0.14.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a R-squared of 85.73 with a Treynor Ratio of 10.92 and a Mean Return of 1.24. Its Beta is 1.23 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Standard Deviation of 18.04 and a Alpha of -3.26.
BND’s Mean Return is 0.96 points lower than that of VXF and its R-squared is 13.61 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than VXF. The Alpha and Beta of BND are 3.12 points higher and 0.19 points lower than VXF’s Alpha and Beta.
Performance
Annual Returns
| Year | BND | VXF |
| 2020 | 7.71% | 32.19% |
| 2019 | 8.71% | 28.04% |
| 2018 | -0.04% | -9.37% |
| 2017 | 3.62% | 18.1% |
| 2016 | 2.57% | 16.16% |
| 2015 | 0.39% | -3.26% |
| 2014 | 5.96% | 7.55% |
| 2013 | -2.14% | 38.37% |
| 2012 | 4.04% | 18.48% |
| 2011 | 7.71% | -3.61% |
| 2010 | 6.51% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BND | $10,000 | $15,456 | 4.09% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
BND’s CAGR is 11.38 percentage points lower than that of VXF and as a result, would have yielded $28,674 less on a $10,000 investment. Thus, BND performed worse than VXF by 11.38% annually.
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