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IGSB vs. MUB: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between IGSB and MUB? And which fund is better?

The expense ratio of IGSB is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%). IGSB is mostly comprised of BBB bonds and MUB has a high exposure to AA bond. Overall, IGSB has provided lower returns than MUB over the past 11 years.

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

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Summary

IGSBMUB
NameiShares 1-5 Year Investment Grade Corporate Bond ETFiShares National Muni Bond ETF
CategoryShort-Term BondMuni National Interm
IssueriSharesiShares
AUM26.63B22.71B
Avg. Return2.51%4.04%
Div. Yield2.02%1.96%
Expense Ratio0.06%0.07%

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

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%.

IGSB’s dividend yield is 0.06% higher than that of MUB (2.02% vs. 1.96%). Also, IGSB yielded on average 1.53% less per year over the past decade (2.51% vs. 4.04%). The expense ratio of IGSB is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%).

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Fund Composition

Holdings

IGSB - Holdings

IGSB Bond SectorsWeight
BBB50.48%
A40.04%
AA7.46%
AAA2.21%
BB0.09%
Below B0.0%
B0.0%
US Government0.0%
Others-0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

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.

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Risk Analysis

IGSBMUB
Mean Return0.190.32
R-squared26.1399
Std. Deviation23.68
Alpha0.69-0.46
Beta0.341.01
Sharpe Ratio0.820.88
Treynor Ratio4.823.2

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Treynor Ratio of 4.82 with a R-squared of 26.13 and a Sharpe Ratio of 0.82. Its Beta is 0.34 while IGSB’s Alpha is 0.69. Furthermore, the fund has a Mean Return of 0.19 and a Standard Deviation of 2.

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

IGSB’s Mean Return is 0.13 points lower than that of MUB and its R-squared is 72.87 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than MUB. The Alpha and Beta of IGSB are 1.15 points higher and 0.67 points lower than MUB’s Alpha and Beta.

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Performance

Annual Returns

IGSB vs. MUB - Annual Returns

YearIGSBMUB
20205.26%4.87%
20197.01%7.28%
20181.34%0.86%
20171.41%4.61%
20161.77%0.06%
20150.7%2.99%
20140.74%8.61%
20131.03%-3.26%
20123.28%6.14%
20111.34%10.85%
20103.69%1.4%

IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% 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

IGSB vs. MUB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IGSB$10,000$13,1032.51%
MUB$10,000$15,3334.04%

A $10,000 investment in IGSB would have resulted in a final balance of $13,103. This is a profit of $3,103 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.51%.

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%.

IGSB’s CAGR is 1.53 percentage points lower than that of MUB and as a result, would have yielded $2,230 less on a $10,000 investment. Thus, IGSB performed worse than MUB by 1.53% annually.


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