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BNDX vs. IAU: What’s The Difference?

The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and IAU is a iShares N/A fund. So, what’s the difference between BNDX and IAU? And which fund is better?

The expense ratio of BNDX is 0.17 percentage points lower than IAU’s (0.08% vs. 0.25%). BNDX is mostly comprised of A bonds while IAU has a high exposure to the technology sector. Overall, BNDX has provided lower returns than IAU over the past ten years.

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

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Summary

BNDXIAU
NameVanguard Total International Bond Index Fund ETF SharesiShares Gold Trust
CategoryN/AN/A
IssuerVanguardiShares
AUM116.41B28.61B
Avg. Return4.63%6.03%
Div. Yield0.94%0.0%
Expense Ratio0.08%0.25%

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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

BNDX’s dividend yield is 0.94% higher than that of IAU (0.94% vs. 0.0%). Also, BNDX yielded on average 1.40% less per year over the past decade (4.63% vs. 6.03%). The expense ratio of BNDX is 0.17 percentage points lower than IAU’s (0.08% vs. 0.25%).

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Fund Composition

Holdings

BNDX - Holdings

BNDX Bond SectorsWeight
A29.19%
AA26.79%
AAA21.59%
BBB19.41%
Others1.57%
Below B1.45%
B0.0%
BB0.0%
US Government0.0%

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.

IAU - Holdings

IAU HoldingsWeight
Gold100.0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

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Risk Analysis

BNDXIAU
Mean Return00.23
R-squared016.03
Std. Deviation016.97
Alpha04.16
Beta00.48
Sharpe Ratio00.13
Treynor Ratio01.5

The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Standard Deviation of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while BNDX’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.

The iShares Gold Trust (IAU) has a Alpha of 4.16 with a Mean Return of 0.23 and a Standard Deviation of 16.97. Its Treynor Ratio is 1.5 while IAU’s Beta is 0.48. Furthermore, the fund has a R-squared of 16.03 and a Sharpe Ratio of 0.13.

BNDX’s Mean Return is 0.23 points lower than that of IAU and its R-squared is 16.03 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than IAU. The Alpha and Beta of BNDX are 4.16 points lower and 0.48 points lower than IAU’s Alpha and Beta.

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Performance

Annual Returns

BNDX vs. IAU - Annual Returns

YearBNDXIAU
20204.6%23.86%
20197.88%18.54%
20182.94%-1.39%
20172.4%11.58%
20164.67%8.85%
20151.08%-11.65%
20148.83%-0.44%
20130.0%-27.96%
20120.0%8.37%
20110.0%8.66%
20100.0%27.93%

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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.

Portfolio Growth

BNDX vs. IAU - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BNDX$10,000$13,6954.63%
IAU$10,000$15,4676.03%

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 IAU, the end total would have been $15,467. This equates to a $5,467 profit over 7 years and a compound annual growth rate (CAGR) of 6.03%.

BNDX’s CAGR is 1.40 percentage points lower than that of IAU and as a result, would have yielded $1,772 less on a $10,000 investment. Thus, BNDX performed worse than IAU by 1.40% annually.


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