BSV vs. MUB: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between BSV and MUB? And which fund is better?

The expense ratio of BSV is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%). BSV is mostly comprised of AAA bonds and MUB has a high exposure to AA bond. Overall, BSV has provided lower returns than MUB over the past ten years.

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

Summary

BSV MUB
Name Vanguard Short-Term Bond Index Fund ETF Shares iShares National Muni Bond ETF
Category Short-Term Bond Muni National Interm
Issuer Vanguard iShares
AUM 67.71B 22.71B
Avg. Return 2.27% 4.04%
Div. Yield 1.48% 1.96%
Expense Ratio 0.05% 0.07%

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.

The iShares National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

BSV’s dividend yield is 0.48% lower than that of MUB (1.48% vs. 1.96%). Also, BSV yielded on average 1.77% less per year over the past decade (2.27% vs. 4.04%). The expense ratio of BSV is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%).

Fund Composition

Holdings

BSV - Holdings

BSV Bond Sectors Weight
AAA 71.65%
BBB 13.08%
A 11.95%
AA 3.28%
Others 0.03%
Below B 0.01%
B 0.0%
BB 0.0%
US Government 0.0%

BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.

MUB - Holdings

MUB Bond Sectors Weight
AA 60.38%
AAA 18.39%
A 15.04%
BBB 6.0%
Others 0.17%
BB 0.02%
Below B 0.0%
B 0.0%
US Government 0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

Risk Analysis

BSV MUB
Mean Return 0.16 0.32
R-squared 78.38 99
Std. Deviation 1.33 3.68
Alpha 0.21 -0.46
Beta 0.38 1.01
Sharpe Ratio 0.98 0.88
Treynor Ratio 3.33 3.2

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Mean Return of 0.16 with a Alpha of 0.21 and a Sharpe Ratio of 0.98. Its R-squared is 78.38 while BSV’s Beta is 0.38. Furthermore, the fund has a Treynor Ratio of 3.33 and a Standard Deviation of 1.33.

The iShares National Muni Bond ETF (MUB) has a Standard Deviation of 3.68 with a Sharpe Ratio of 0.88 and a Mean Return of 0.32. Its Beta is 1.01 while MUB’s R-squared is 99. Furthermore, the fund has a Alpha of -0.46 and a Treynor Ratio of 3.2.

BSV’s Mean Return is 0.16 points lower than that of MUB and its R-squared is 20.62 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than MUB. The Alpha and Beta of BSV are 0.67 points higher and 0.63 points lower than MUB’s Alpha and Beta.

Performance

Annual Returns

BSV vs. MUB - Annual Returns

Year BSV MUB
2020 4.67% 4.87%
2019 4.92% 7.28%
2018 1.34% 0.86%
2017 1.2% 4.61%
2016 1.42% 0.06%
2015 0.92% 2.99%
2014 1.32% 8.61%
2013 0.17% -3.26%
2012 1.98% 6.14%
2011 3.04% 10.85%
2010 4.0% 1.4%

BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.

The year 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.

Portfolio Growth

BSV vs. MUB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
MUB $10,000 $15,333 4.04%

A $10,000 investment in BSV would have resulted in a final balance of $12,785. This is a profit of $2,785 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.

BSV’s CAGR is 1.77 percentage points lower than that of MUB and as a result, would have yielded $2,548 less on a $10,000 investment. Thus, BSV performed worse than MUB by 1.77% annually.


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