BNDX vs. IEF: What’s The Difference?

The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and IEF is a iShares Long Government fund. So, what’s the difference between BNDX and IEF? And which fund is better?

The expense ratio of BNDX is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%). BNDX is mostly comprised of A bonds and IEF has a high exposure to AAA bond. Overall, BNDX has provided lower returns than IEF over the past ten years.

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

Summary

BNDX IEF
Name Vanguard Total International Bond Index Fund ETF Shares iShares 7-10 Year Treasury Bond ETF
Category N/A Long Government
Issuer Vanguard iShares
AUM 116.41B 13.44B
Avg. Return 4.63% 5.06%
Div. Yield 0.94% 0.84%
Expense Ratio 0.08% 0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

BNDX’s dividend yield is 0.10% higher than that of IEF (0.94% vs. 0.84%). Also, BNDX yielded on average 0.43% less per year over the past decade (4.63% vs. 5.06%). The expense ratio of BNDX is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%).

Fund Composition

Holdings

BNDX - Holdings

BNDX Bond Sectors Weight
A 29.19%
AA 26.79%
AAA 21.59%
BBB 19.41%
Others 1.57%
Below B 1.45%
B 0.0%
BB 0.0%
US Government 0.0%

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.

IEF - Holdings

IEF Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

Risk Analysis

BNDX IEF
Mean Return 0 0.32
R-squared 0 77.56
Std. Deviation 0 5.42
Alpha 0 -1.2
Beta 0 1.59
Sharpe Ratio 0 0.6
Treynor Ratio 0 1.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Alpha of -1.2 with a Standard Deviation of 5.42 and a Sharpe Ratio of 0.6. Its R-squared is 77.56 while IEF’s Treynor Ratio is 1.97. Furthermore, the fund has a Mean Return of 0.32 and a Beta of 1.59.

BNDX’s Mean Return is 0.32 points lower than that of IEF and its R-squared is 77.56 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than IEF. The Alpha and Beta of BNDX are 1.20 points higher and 1.59 points lower than IEF’s Alpha and Beta.

Performance

Annual Returns

BNDX vs. IEF - Annual Returns

Year BNDX IEF
2020 4.6% 9.84%
2019 7.88% 8.38%
2018 2.94% 0.82%
2017 2.4% 2.47%
2016 4.67% 1.0%
2015 1.08% 1.55%
2014 8.83% 8.92%
2013 0.0% -6.12%
2012 0.0% 4.06%
2011 0.0% 15.46%
2010 0.0% 9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

BNDX vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BNDX $10,000 $13,695 4.63%
IEF $10,000 $13,739 5.06%

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 IEF, the end total would have been $13,739. This equates to a $3,739 profit over 7 years and a compound annual growth rate (CAGR) of 5.06%.

BNDX’s CAGR is 0.43 percentage points lower than that of IEF and as a result, would have yielded $44 less on a $10,000 investment. Thus, BNDX performed worse than IEF by 0.43% annually.


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