The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and SHY is a iShares Short Government fund. So, what’s the difference between BNDX and SHY? And which fund is better?
The expense ratio of BNDX is 0.07 percentage points lower than SHY’s (0.08% vs. 0.15%). BNDX is mostly comprised of A bonds and SHY has a high exposure to AAA bond. Overall, BNDX has provided higher returns than SHY over the past ten years.
In this article, we’ll compare BNDX vs. SHY. We’ll look at performance and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss BNDX’s and SHY’s risk metrics, fund composition, and industry exposure and examine how these affect their overall returns.
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Summary
| BNDX | SHY | |
| Name | Vanguard Total International Bond Index Fund ETF Shares | iShares 1-3 Year Treasury Bond ETF |
| Category | N/A | Short Government |
| Issuer | Vanguard | iShares |
| AUM | 116.41B | 19.51B |
| Avg. Return | 4.63% | 1.27% |
| Div. Yield | 0.94% | 0.46% |
| 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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
BNDX’s dividend yield is 0.48% higher than that of SHY (0.94% vs. 0.46%). Also, BNDX yielded on average 3.35% more per year over the past decade (4.63% vs. 1.27%). The expense ratio of BNDX is 0.07 percentage points lower than SHY’s (0.08% vs. 0.15%).
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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.
| SHY Bond Sectors | Weight |
| AAA | 99.67% |
| Others | 0.33% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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 | SHY | |
| Mean Return | 0 | 0.09 |
| R-squared | 0 | 39.11 |
| Std. Deviation | 0 | 0.89 |
| Alpha | 0 | -0.03 |
| Beta | 0 | 0.18 |
| Sharpe Ratio | 0 | 0.54 |
| Treynor Ratio | 0 | 2.6 |
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Alpha of 0 with a Sharpe Ratio of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while BNDX’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Alpha of -0.03 with a Treynor Ratio of 2.6 and a R-squared of 39.11. Its Beta is 0.18 while SHY’s Mean Return is 0.09. Furthermore, the fund has a Standard Deviation of 0.89 and a Sharpe Ratio of 0.54.
BNDX’s Mean Return is 0.09 points lower than that of SHY and its R-squared is 39.11 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than SHY. The Alpha and Beta of BNDX are 0.03 points higher and 0.18 points lower than SHY’s Alpha and Beta.
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Performance
Annual Returns
| Year | BNDX | SHY |
| 2020 | 4.6% | 3.01% |
| 2019 | 7.88% | 3.42% |
| 2018 | 2.94% | 1.45% |
| 2017 | 2.4% | 0.27% |
| 2016 | 4.67% | 0.75% |
| 2015 | 1.08% | 0.43% |
| 2014 | 8.83% | 0.48% |
| 2013 | 0.0% | 0.23% |
| 2012 | 0.0% | 0.31% |
| 2011 | 0.0% | 1.43% |
| 2010 | 0.0% | 2.23% |
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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BNDX | $10,000 | $13,695 | 4.63% |
| SHY | $10,000 | $11,017 | 1.27% |
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 SHY, the end total would have been $11,017. This equates to a $1,017 profit over 7 years and a compound annual growth rate (CAGR) of 1.27%.
BNDX’s CAGR is 3.35 percentage points higher than that of SHY and as a result, would have yielded $2,678 more on a $10,000 investment. Thus, BNDX outperformed SHY by 3.35% annually.
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