The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the Vanguard Real Estate Index Fund ETF Shares (VNQ) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and VNQ is a Vanguard Real Estate fund. So, what’s the difference between BNDX and VNQ? And which fund is better?
The expense ratio of BNDX is 0.04 percentage points lower than VNQ’s (0.08% vs. 0.12%). BNDX is mostly comprised of A bonds while VNQ has a high exposure to the real estate sector. Overall, BNDX has provided lower returns than VNQ over the past ten years.
In this article, we’ll compare BNDX vs. VNQ. We’ll look at annual returns and holdings, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss BNDX’s and VNQ’s fund composition, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Total International Bond Index Fund ETF Shares||Vanguard Real Estate Index Fund ETF Shares|
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 Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.
BNDX’s dividend yield is 1.40% lower than that of VNQ (0.94% vs. 2.34%). Also, BNDX yielded on average 6.42% less per year over the past decade (4.63% vs. 11.05%). The expense ratio of BNDX is 0.04 percentage points lower than VNQ’s (0.08% vs. 0.12%).
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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.
|Vanguard Real Estate II Index||11.62%|
|American Tower Corp||7.24%|
|Crown Castle International Corp||5.01%|
|Simon Property Group Inc||2.52%|
|Digital Realty Trust Inc||2.49%|
|SBA Communications Corp||2.1%|
VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.
Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.
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The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a R-squared of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while BNDX’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.
The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a Sharpe Ratio of 0.62 with a R-squared of 44.4 and a Mean Return of 0.89. Its Standard Deviation is 16.13 while VNQ’s Alpha is 2.47. Furthermore, the fund has a Treynor Ratio of 11.9 and a Beta of 0.76.
BNDX’s Mean Return is 0.89 points lower than that of VNQ and its R-squared is 44.40 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than VNQ. The Alpha and Beta of BNDX are 2.47 points lower and 0.76 points lower than VNQ’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 2014 was the strongest year for VNQ, returning 30.29% on an annual basis. The poorest year for VNQ in the last ten years was 2018, with a yield of -5.95%. Most years the Vanguard Real Estate Index Fund ETF Shares has given investors modest returns, such as in 2017, 2016, and 2011, when gains were 4.95%, 8.53%, and 8.62% 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 VNQ, the end total would have been $17,549. This equates to a $7,549 profit over 7 years and a compound annual growth rate (CAGR) of 11.05%.
BNDX’s CAGR is 6.42 percentage points lower than that of VNQ and as a result, would have yielded $3,854 less on a $10,000 investment. Thus, BNDX performed worse than VNQ by 6.42% annually.
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