The iShares MBS ETF (MBB) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between MBB and BIV? And which fund is better?
The expense ratio of MBB is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%). MBB is mostly comprised of AAA bonds and BIV has a high exposure to AAA bond. Overall, MBB has provided lower returns than BIV over the past 11 years.
In this article, we’ll compare MBB vs. BIV. We’ll look at performance and holdings, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss MBB’s and BIV’s industry exposure, risk metrics, and fund composition and examine how these affect their overall returns.
|Name||iShares MBS ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Intermediate Government||Intermediate-Term Bond|
The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
MBB’s dividend yield is 0.18% lower than that of BIV (1.88% vs. 2.06%). Also, MBB yielded on average 2.24% less per year over the past decade (3.08% vs. 5.31%). The expense ratio of MBB is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%).
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|MBB Bond Sectors||Weight|
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The iShares MBS ETF (MBB) has a Sharpe Ratio of 0.87 with a Alpha of 0.14 and a Mean Return of 0.2. Its R-squared is 74.38 while MBB’s Treynor Ratio is 3.02. Furthermore, the fund has a Beta of 0.6 and a Standard Deviation of 2.12.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Mean Return of 0.35 with a Sharpe Ratio of 0.89 and a R-squared of 95.12. Its Alpha is -0.07 while BIV’s Treynor Ratio is 2.72. Furthermore, the fund has a Standard Deviation of 4.09 and a Beta of 1.33.
MBB’s Mean Return is 0.15 points lower than that of BIV and its R-squared is 20.74 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than BIV. The Alpha and Beta of MBB are 0.21 points higher and 0.73 points lower than BIV’s Alpha and Beta.
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MBB had its best year in 2019 with an annual return of 6.27%. MBB’s worst year over the past decade yielded -1.92% and occurred in 2013. In most years the iShares MBS ETF provided moderate returns such as in 2012, 2017, and 2020 where annual returns amounted to 2.23%, 2.37%, and 4.03% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in MBB would have resulted in a final balance of $13,906. This is a profit of $3,906 over 11 years and amounts to a compound annual growth rate (CAGR) of 3.08%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
MBB’s CAGR is 2.24 percentage points lower than that of BIV and as a result, would have yielded $3,586 less on a $10,000 investment. Thus, MBB performed worse than BIV by 2.24% annually.
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