The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between BNDX and VEU? And which fund is better?
BNDX and VEU have the same expense ratio: 0.08%. BNDX is mostly comprised of A bonds while VEU has a high exposure to the financial services sector. Overall, BNDX has provided lower returns than VEU over the past ten years.
In this article, we’ll compare BNDX vs. VEU. We’ll look at fund composition and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss BNDX’s and VEU’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
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Summary
| BNDX | VEU | |
| Name | Vanguard Total International Bond Index Fund ETF Shares | Vanguard FTSE All-World ex-US Index Fund ETF Shares |
| Category | N/A | Foreign Large Blend |
| Issuer | Vanguard | Vanguard |
| AUM | 116.41B | 53.64B |
| Avg. Return | 4.63% | 6.64% |
| Div. Yield | 0.94% | 2.31% |
| Expense Ratio | 0.08% | 0.08% |
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 Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
BNDX’s dividend yield is 1.37% lower than that of VEU (0.94% vs. 2.31%). Also, BNDX yielded on average 2.01% less per year over the past decade (4.63% vs. 6.64%). BNDX and VEU have the same expense ratio: 0.08%.
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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.
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
Risk Analysis
| BNDX | VEU | |
| Mean Return | 0 | 0.56 |
| R-squared | 0 | 98.44 |
| Std. Deviation | 0 | 15.08 |
| Alpha | 0 | 0.28 |
| Beta | 0 | 0.99 |
| Sharpe Ratio | 0 | 0.4 |
| Treynor Ratio | 0 | 5.12 |
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Sharpe Ratio of 0 with a Beta of 0 and a R-squared of 0. Its Mean Return is 0 while BNDX’s Alpha is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Standard Deviation of 15.08 with a Treynor Ratio of 5.12 and a Beta of 0.99. Its Alpha is 0.28 while VEU’s R-squared is 98.44. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Mean Return of 0.56.
BNDX’s Mean Return is 0.56 points lower than that of VEU and its R-squared is 98.44 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than VEU. The Alpha and Beta of BNDX are 0.28 points lower and 0.99 points lower than VEU’s Alpha and Beta.
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Performance
Annual Returns
| Year | BNDX | VEU |
| 2020 | 4.6% | 11.39% |
| 2019 | 7.88% | 21.63% |
| 2018 | 2.94% | -13.97% |
| 2017 | 2.4% | 27.27% |
| 2016 | 4.67% | 4.77% |
| 2015 | 1.08% | -4.67% |
| 2014 | 8.83% | -4.05% |
| 2013 | 0.0% | 14.5% |
| 2012 | 0.0% | 18.55% |
| 2011 | 0.0% | -14.25% |
| 2010 | 0.0% | 11.85% |
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 2017 was the strongest year for VEU, returning 27.27% on an annual basis. The poorest year for VEU in the last ten years was 2011, with a yield of -14.25%. Most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares has given investors modest returns, such as in 2016, 2020, and 2010, when gains were 4.77%, 11.39%, and 11.85% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BNDX | $10,000 | $13,695 | 4.63% |
| VEU | $10,000 | $14,215 | 6.64% |
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 VEU, the end total would have been $14,215. This equates to a $4,215 profit over 7 years and a compound annual growth rate (CAGR) of 6.64%.
BNDX’s CAGR is 2.01 percentage points lower than that of VEU and as a result, would have yielded $520 less on a $10,000 investment. Thus, BNDX performed worse than VEU by 2.01% annually.
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