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BNDX vs. TIP: What’s The Difference?

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

The expense ratio of BNDX is 0.11 percentage points lower than TIP’s (0.08% vs. 0.19%). BNDX is mostly comprised of A bonds and TIP has a high exposure to AAA bond. Overall, BNDX has provided higher returns than TIP over the past ten years.

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

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Summary

BNDXTIP
NameVanguard Total International Bond Index Fund ETF SharesiShares TIPS Bond ETF
CategoryN/AInflation-Protected Bond
IssuerVanguardiShares
AUM116.41B28.3B
Avg. Return4.63%4.07%
Div. Yield0.94%1.87%
Expense Ratio0.08%0.19%

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 TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.19%.

BNDX’s dividend yield is 0.93% lower than that of TIP (0.94% vs. 1.87%). Also, BNDX yielded on average 0.56% more per year over the past decade (4.63% vs. 4.07%). The expense ratio of BNDX is 0.11 percentage points lower than TIP’s (0.08% vs. 0.19%).

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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.

TIP - Holdings

TIP Bond SectorsWeight
AAA99.31%
Others0.69%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 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

BNDXTIP
Mean Return00.28
R-squared066.57
Std. Deviation04.33
Alpha0-0.58
Beta01.18
Sharpe Ratio00.62
Treynor Ratio02.24

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

The iShares TIPS Bond ETF (TIP) has a R-squared of 66.57 with a Treynor Ratio of 2.24 and a Standard Deviation of 4.33. Its Sharpe Ratio is 0.62 while TIP’s Mean Return is 0.28. Furthermore, the fund has a Beta of 1.18 and a Alpha of -0.58.

BNDX’s Mean Return is 0.28 points lower than that of TIP and its R-squared is 66.57 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than TIP. The Alpha and Beta of BNDX are 0.58 points higher and 1.18 points lower than TIP’s Alpha and Beta.

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Performance

Annual Returns

BNDX vs. TIP - Annual Returns

YearBNDXTIP
20204.6%10.91%
20197.88%8.28%
20182.94%-1.43%
20172.4%2.92%
20164.67%4.56%
20151.08%-1.59%
20148.83%3.49%
20130.0%-8.65%
20120.0%6.8%
20110.0%13.4%
20100.0%6.1%

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 TIP, returning 13.4% on an annual basis. The poorest year for TIP in the last ten years was 2013, with a yield of -8.65%. Most years the iShares TIPS Bond ETF has given investors modest returns, such as in 2014, 2016, and 2010, when gains were 3.49%, 4.56%, and 6.1% respectively.

Portfolio Growth

BNDX vs. TIP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BNDX$10,000$13,6954.63%
TIP$10,000$12,9734.07%

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 TIP, the end total would have been $12,973. This equates to a $2,973 profit over 7 years and a compound annual growth rate (CAGR) of 4.07%.

BNDX’s CAGR is 0.56 percentage points higher than that of TIP and as a result, would have yielded $722 more on a $10,000 investment. Thus, BNDX outperformed TIP by 0.56% annually.


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