The iShares Core MSCI Total International Stock ETF (IXUS) and the Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) are both among the Top 100 ETFs. IXUS is a iShares Foreign Large Blend fund and VMBS is a Vanguard Intermediate Government fund. So, what’s the difference between IXUS and VMBS? And which fund is better?
The expense ratio of IXUS is 0.04 percentage points higher than VMBS’s (0.09% vs. 0.05%). IXUS also has a high exposure to the financial services sector while VMBS is mostly comprised of AAA bonds. Overall, IXUS has provided higher returns than VMBS over the past ten years.
In this article, we’ll compare IXUS vs. VMBS. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss IXUS’s and VMBS’s performance, risk metrics, and holdings and examine how these affect their overall returns.
Summary
| IXUS | VMBS | |
| Name | iShares Core MSCI Total International Stock ETF | Vanguard Mortgage-Backed Securities Index Fund ETF Shares |
| Category | Foreign Large Blend | Intermediate Government |
| Issuer | iShares | Vanguard |
| AUM | 29.54B | 16.61B |
| Avg. Return | 6.09% | 2.89% |
| Div. Yield | 2.13% | 1.23% |
| Expense Ratio | 0.09% | 0.05% |
The iShares Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.
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%.
IXUS’s dividend yield is 0.90% higher than that of VMBS (2.13% vs. 1.23%). Also, IXUS yielded on average 3.19% more per year over the past decade (6.09% vs. 2.89%). The expense ratio of IXUS is 0.04 percentage points higher than VMBS’s (0.09% vs. 0.05%).
Fund Composition
Holdings
| IXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.64% |
| Tencent Holdings Ltd | 1.35% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.34% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.06% |
| ASML Holding NV | 0.9% |
| Roche Holding AG | 0.81% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.67% |
| Novartis AG | 0.62% |
| Toyota Motor Corp | 0.59% |
IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.
ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.
| 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.
Risk Analysis
| IXUS | VMBS | |
| Mean Return | 0 | 0.21 |
| R-squared | 0 | 65.78 |
| Std. Deviation | 0 | 2.02 |
| Alpha | 0 | 0.37 |
| Beta | 0 | 0.54 |
| Sharpe Ratio | 0 | 0.94 |
| Treynor Ratio | 0 | 3.47 |
The iShares Core MSCI Total International Stock ETF (IXUS) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Beta is 0 while IXUS’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.
The Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) has a Alpha of 0.37 with a Standard Deviation of 2.02 and a Treynor Ratio of 3.47. Its Mean Return is 0.21 while VMBS’s Sharpe Ratio is 0.94. Furthermore, the fund has a R-squared of 65.78 and a Beta of 0.54.
IXUS’s Mean Return is 0.21 points lower than that of VMBS and its R-squared is 65.78 points lower. With a Standard Deviation of 0, IXUS is slightly less volatile than VMBS. The Alpha and Beta of IXUS are 0.37 points lower and 0.54 points lower than VMBS’s Alpha and Beta.
Performance
Annual Returns
| Year | IXUS | VMBS |
| 2020 | 11.14% | 3.77% |
| 2019 | 21.85% | 6.17% |
| 2018 | -14.55% | 0.87% |
| 2017 | 28.08% | 2.37% |
| 2016 | 4.66% | 1.43% |
| 2015 | -4.62% | 1.43% |
| 2014 | -3.96% | 5.81% |
| 2013 | 15.85% | -1.28% |
| 2012 | 0.0% | 2.47% |
| 2011 | 0.0% | 5.89% |
| 2010 | 0.0% | 5.24% |
IXUS had its best year in 2017 with an annual return of 28.08%. IXUS’s worst year over the past decade yielded -14.55% and occurred in 2018. In most years the iShares Core MSCI Total International Stock ETF provided moderate returns such as in 2011, 2010, and 2016 where annual returns amounted to 0.0%, 0.0%, and 4.66% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IXUS | $10,000 | $14,209 | 6.09% |
| VMBS | $10,000 | $12,384 | 2.89% |
A $10,000 investment in IXUS would have resulted in a final balance of $14,209. This is a profit of $4,209 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.09%.
With a $10,000 investment in VMBS, the end total would have been $12,384. This equates to a $2,384 profit over 7 years and a compound annual growth rate (CAGR) of 2.89%.
IXUS’s CAGR is 3.19 percentage points higher than that of VMBS and as a result, would have yielded $1,825 more on a $10,000 investment. Thus, IXUS outperformed VMBS by 3.19% annually.
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