The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and ACWI is a iShares N/A fund. So, what’s the difference between BNDX and ACWI? And which fund is better?
The expense ratio of BNDX is 0.24 percentage points lower than ACWI’s (0.08% vs. 0.32%). BNDX is mostly comprised of A bonds while ACWI has a high exposure to the technology sector. Overall, BNDX has provided lower returns than ACWI over the past ten years.
In this article, we’ll compare BNDX vs. ACWI. We’ll look at industry exposure and portfolio growth, as well as at their annual returns and holdings. Moreover, I’ll also discuss BNDX’s and ACWI’s fund composition, performance, and risk metrics and examine how these affect their overall returns.
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|Name||Vanguard Total International Bond Index Fund ETF Shares||iShares MSCI ACWI ETF|
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
BNDX’s dividend yield is 0.45% lower than that of ACWI (0.94% vs. 1.39%). Also, BNDX yielded on average 5.59% less per year over the past decade (4.63% vs. 10.21%). The expense ratio of BNDX is 0.24 percentage points lower than ACWI’s (0.08% vs. 0.32%).
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|BNDX Bond Sectors||Weight|
BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Mean Return of 0 with a Alpha of 0 and a Treynor Ratio of 0. Its Beta is 0 while BNDX’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Sharpe Ratio of 0.
The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a Alpha of 0.15 and a Sharpe Ratio of 0.71. Its Treynor Ratio is 9.45 while ACWI’s Standard Deviation is 14.05. Furthermore, the fund has a Beta of 1 and a R-squared of 99.96.
BNDX’s Mean Return is 0.89 points lower than that of ACWI and its R-squared is 99.96 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than ACWI. The Alpha and Beta of BNDX are 0.15 points lower and 1.00 points lower than ACWI’s Alpha and Beta.
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BNDX had its best year in 2014 with an annual return of 8.83%. BNDX’s worst year over the past decade yielded 0.0% and occurred in 2013. In most years the Vanguard Total International Bond Index Fund ETF Shares provided moderate returns such as in 2015, 2017, and 2018 where annual returns amounted to 1.08%, 2.4%, and 2.94% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BNDX would have resulted in a final balance of $13,695. This is a profit of $3,695 over 7 years and amounts to a compound annual growth rate (CAGR) of 4.63%.
With a $10,000 investment in ACWI, the end total would have been $18,413. This equates to a $8,413 profit over 7 years and a compound annual growth rate (CAGR) of 10.21%.
BNDX’s CAGR is 5.59 percentage points lower than that of ACWI and as a result, would have yielded $4,718 less on a $10,000 investment. Thus, BNDX performed worse than ACWI by 5.59% annually.
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