The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between BNDX and IGSB? And which fund is better?
The expense ratio of BNDX is 0.02 percentage points higher than IGSB’s (0.08% vs. 0.06%). BNDX is mostly comprised of A bonds and IGSB has a high exposure to BBB bond. Overall, BNDX has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare BNDX vs. IGSB. We’ll look at portfolio growth and performance, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss BNDX’s and IGSB’s holdings, fund composition, and risk metrics and examine how these affect their overall returns.
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Summary
| BNDX | IGSB | |
| Name | Vanguard Total International Bond Index Fund ETF Shares | iShares 1-5 Year Investment Grade Corporate Bond ETF |
| Category | N/A | Short-Term Bond |
| Issuer | Vanguard | iShares |
| AUM | 116.41B | 26.63B |
| Avg. Return | 4.63% | 2.51% |
| Div. Yield | 0.94% | 2.02% |
| Expense Ratio | 0.08% | 0.06% |
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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
BNDX’s dividend yield is 1.08% lower than that of IGSB (0.94% vs. 2.02%). Also, BNDX yielded on average 2.12% more per year over the past decade (4.63% vs. 2.51%). The expense ratio of BNDX is 0.02 percentage points higher than IGSB’s (0.08% vs. 0.06%).
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Fund Composition
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.
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.28% |
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
Risk Analysis
| BNDX | IGSB | |
| Mean Return | 0 | 0.19 |
| R-squared | 0 | 26.13 |
| Std. Deviation | 0 | 2 |
| Alpha | 0 | 0.69 |
| Beta | 0 | 0.34 |
| Sharpe Ratio | 0 | 0.82 |
| Treynor Ratio | 0 | 4.82 |
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Standard Deviation of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its Alpha is 0 while BNDX’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a R-squared of 26.13 with a Treynor Ratio of 4.82 and a Alpha of 0.69. Its Standard Deviation is 2 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a Beta of 0.34 and a Mean Return of 0.19.
BNDX’s Mean Return is 0.19 points lower than that of IGSB and its R-squared is 26.13 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than IGSB. The Alpha and Beta of BNDX are 0.69 points lower and 0.34 points lower than IGSB’s Alpha and Beta.
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Performance
Annual Returns
| Year | BNDX | IGSB |
| 2020 | 4.6% | 5.26% |
| 2019 | 7.88% | 7.01% |
| 2018 | 2.94% | 1.34% |
| 2017 | 2.4% | 1.41% |
| 2016 | 4.67% | 1.77% |
| 2015 | 1.08% | 0.7% |
| 2014 | 8.83% | 0.74% |
| 2013 | 0.0% | 1.03% |
| 2012 | 0.0% | 3.28% |
| 2011 | 0.0% | 1.34% |
| 2010 | 0.0% | 3.69% |
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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BNDX | $10,000 | $13,695 | 4.63% |
| IGSB | $10,000 | $11,950 | 2.51% |
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 IGSB, the end total would have been $11,950. This equates to a $1,950 profit over 7 years and a compound annual growth rate (CAGR) of 2.51%.
BNDX’s CAGR is 2.12 percentage points higher than that of IGSB and as a result, would have yielded $1,745 more on a $10,000 investment. Thus, BNDX outperformed IGSB by 2.12% annually.
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