The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and LQD is a iShares Corporate Bond fund. So, what’s the difference between BNDX and LQD? And which fund is better?
The expense ratio of BNDX is 0.06 percentage points lower than LQD’s (0.08% vs. 0.14%). BNDX is mostly comprised of A bonds and LQD has a high exposure to BBB bond. Overall, BNDX has provided lower returns than LQD over the past ten years.
In this article, we’ll compare BNDX vs. LQD. We’ll look at industry exposure and portfolio growth, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss BNDX’s and LQD’s holdings, performance, and annual returns and examine how these affect their overall returns.
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|Name||Vanguard Total International Bond Index Fund ETF Shares||iShares iBoxx $ Investment Grade Corporate Bond 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 iBoxx $ Investment Grade Corporate Bond ETF (LQD) is a Corporate Bond fund that is issued by iShares. It currently has 40.23B total assets under management and has yielded an average annual return of 6.58% over the past 10 years. The fund has a dividend yield of 2.48% with an expense ratio of 0.14%.
BNDX’s dividend yield is 1.54% lower than that of LQD (0.94% vs. 2.48%). Also, BNDX yielded on average 1.95% less per year over the past decade (4.63% vs. 6.58%). The expense ratio of BNDX is 0.06 percentage points lower than LQD’s (0.08% vs. 0.14%).
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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.
|LQD Bond Sectors||Weight|
LQD’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.92%, 37.97%, 8.49%, 2.7%, and 0.05%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Standard Deviation of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while BNDX’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a Alpha of 0.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has a Sharpe Ratio of 0.85 with a Mean Return of 0.47 and a Alpha of 0.52. Its Standard Deviation is 5.94 while LQD’s R-squared is 66.93. Furthermore, the fund has a Treynor Ratio of 3.08 and a Beta of 1.62.
BNDX’s Mean Return is 0.47 points lower than that of LQD and its R-squared is 66.93 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than LQD. The Alpha and Beta of BNDX are 0.52 points lower and 1.62 points lower than LQD’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 LQD, returning 17.13% on an annual basis. The poorest year for LQD in the last ten years was 2018, with a yield of -3.76%. Most years the iShares iBoxx $ Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 7.16%, 8.57%, and 8.89% 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 LQD, the end total would have been $15,279. This equates to a $5,279 profit over 7 years and a compound annual growth rate (CAGR) of 6.58%.
BNDX’s CAGR is 1.95 percentage points lower than that of LQD and as a result, would have yielded $1,584 less on a $10,000 investment. Thus, BNDX performed worse than LQD by 1.95% annually.
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