GLD vs. VMBS: What’s The Difference?

The SPDR Gold Shares (GLD) and the Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) are both among the Top 100 ETFs. GLD is a SPDR State Street Global Advisors N/A fund and VMBS is a Vanguard Intermediate Government fund. So, what’s the difference between GLD and VMBS? And which fund is better?

The expense ratio of GLD is 0.35 percentage points higher than VMBS’s (0.4% vs. 0.05%). GLD also has a high exposure to the technology sector while VMBS is mostly comprised of AAA bonds. Overall, GLD has provided higher returns than VMBS over the past ten years.

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

Summary

GLD VMBS
Name SPDR Gold Shares Vanguard Mortgage-Backed Securities Index Fund ETF Shares
Category N/A Intermediate Government
Issuer SPDR State Street Global Advisors Vanguard
AUM 59.26B 16.61B
Avg. Return 5.81% 2.89%
Div. Yield 0.0% 1.23%
Expense Ratio 0.4% 0.05%

The SPDR Gold Shares (GLD) is a N/A fund that is issued by SPDR State Street Global Advisors. It currently has 59.26B total assets under management and has yielded an average annual return of 5.81% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.4%.

The Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) is a Intermediate Government fund that is issued by Vanguard. It currently has 16.61B total assets under management and has yielded an average annual return of 2.89% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.05%.

GLD’s dividend yield is 1.23% lower than that of VMBS (0.0% vs. 1.23%). Also, GLD yielded on average 2.91% more per year over the past decade (5.81% vs. 2.89%). The expense ratio of GLD is 0.35 percentage points higher than VMBS’s (0.4% vs. 0.05%).

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Fund Composition

Holdings

GLD - Holdings

GLD Holdings Weight
Gold Trust 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

GLD’s Top Holdings are Gold Trust, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the GLD’s holdings at 0% and 0%.

VMBS - Holdings

VMBS Bond Sectors Weight
AAA 100.01%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%
Others -0.01%

VMBS’s Top Bond Sectors are ratings of AAA, Below B, B, BB, and BBB at 100.01%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.

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Risk Analysis

GLD VMBS
Mean Return 0.21 0.21
R-squared 16.21 65.78
Std. Deviation 16.58 2.02
Alpha 3.91 0.37
Beta 0.48 0.54
Sharpe Ratio 0.12 0.94
Treynor Ratio 1.21 3.47

The SPDR Gold Shares (GLD) has a Beta of 0.48 with a Mean Return of 0.21 and a Sharpe Ratio of 0.12. Its R-squared is 16.21 while GLD’s Standard Deviation is 16.58. Furthermore, the fund has a Treynor Ratio of 1.21 and a Alpha of 3.91.

The Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) has a Alpha of 0.37 with a Mean Return of 0.21 and a Standard Deviation of 2.02. Its R-squared is 65.78 while VMBS’s Sharpe Ratio is 0.94. Furthermore, the fund has a Treynor Ratio of 3.47 and a Beta of 0.54.

GLD’s Mean Return is 0.00 points lower than that of VMBS and its R-squared is 49.57 points lower. With a Standard Deviation of 16.58, GLD is slightly more volatile than VMBS. The Alpha and Beta of GLD are 3.54 points higher and 0.06 points lower than VMBS’s Alpha and Beta.

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Performance

Annual Returns

GLD vs. VMBS - Annual Returns

Year GLD VMBS
2020 23.68% 3.77%
2019 18.36% 6.17%
2018 -1.54% 0.87%
2017 11.41% 2.37%
2016 8.69% 1.43%
2015 -11.78% 1.43%
2014 -0.58% 5.81%
2013 -28.09% -1.28%
2012 5.26% 2.47%
2011 11.2% 5.89%
2010 27.25% 5.24%

GLD had its best year in 2010 with an annual return of 27.25%. GLD’s worst year over the past decade yielded -28.09% and occurred in 2013. In most years the SPDR Gold Shares provided moderate returns such as in 2012, 2016, and 2011 where annual returns amounted to 5.26%, 8.69%, and 11.2% respectively.

The year 2019 was the strongest year for VMBS, returning 6.17% on an annual basis. The poorest year for VMBS in the last ten years was 2013, with a yield of -1.28%. Most years the Vanguard Mortgage-Backed Securities Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 2.37%, 2.47%, and 3.77% respectively.

Portfolio Growth

GLD vs. VMBS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
GLD $10,000 $12,884 5.81%
VMBS $10,000 $13,265 2.89%

A $10,000 investment in GLD would have resulted in a final balance of $12,884. This is a profit of $2,884 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.81%.

With a $10,000 investment in VMBS, the end total would have been $13,265. This equates to a $3,265 profit over 10 years and a compound annual growth rate (CAGR) of 2.89%.

GLD’s CAGR is 2.91 percentage points higher than that of VMBS and as a result, would have yielded $381 less on a $10,000 investment. Thus, GLD outperformed VMBS by 2.91% annually.


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