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BNDX vs. MBB: What’s The Difference?

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

The expense ratio of BNDX is 0.02 percentage points higher than MBB’s (0.08% vs. 0.06%). BNDX is mostly comprised of A bonds and MBB has a high exposure to AAA bond. Overall, BNDX has provided higher returns than MBB over the past ten years.

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

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Summary

BNDXMBB
NameVanguard Total International Bond Index Fund ETF SharesiShares MBS ETF
CategoryN/AIntermediate Government
IssuerVanguardiShares
AUM116.41B25.69B
Avg. Return4.63%3.08%
Div. Yield0.94%1.88%
Expense Ratio0.08%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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

BNDX’s dividend yield is 0.94% lower than that of MBB (0.94% vs. 1.88%). Also, BNDX yielded on average 1.55% more per year over the past decade (4.63% vs. 3.08%). The expense ratio of BNDX is 0.02 percentage points higher than MBB’s (0.08% vs. 0.06%).

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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.

MBB - Holdings

MBB Bond SectorsWeight
AAA99.51%
Others0.49%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 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.

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Risk Analysis

BNDXMBB
Mean Return00.2
R-squared074.38
Std. Deviation02.12
Alpha00.14
Beta00.6
Sharpe Ratio00.87
Treynor Ratio03.02

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

The iShares MBS ETF (MBB) has a Beta of 0.6 with a Mean Return of 0.2 and a Standard Deviation of 2.12. Its Alpha is 0.14 while MBB’s R-squared is 74.38. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Treynor Ratio of 3.02.

BNDX’s Mean Return is 0.20 points lower than that of MBB and its R-squared is 74.38 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than MBB. The Alpha and Beta of BNDX are 0.14 points lower and 0.60 points lower than MBB’s Alpha and Beta.

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Performance

Annual Returns

BNDX vs. MBB - Annual Returns

YearBNDXMBB
20204.6%4.03%
20197.88%6.27%
20182.94%0.81%
20172.4%2.37%
20164.67%1.28%
20151.08%1.28%
20148.83%6.16%
20130.0%-1.92%
20120.0%2.23%
20110.0%5.88%
20100.0%5.44%

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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.

Portfolio Growth

BNDX vs. MBB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BNDX$10,000$13,6954.63%
MBB$10,000$12,4233.08%

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 MBB, the end total would have been $12,423. This equates to a $2,423 profit over 7 years and a compound annual growth rate (CAGR) of 3.08%.

BNDX’s CAGR is 1.55 percentage points higher than that of MBB and as a result, would have yielded $1,272 more on a $10,000 investment. Thus, BNDX outperformed MBB by 1.55% annually.


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