The iShares MBS ETF (MBB) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between MBB and VBK? And which fund is better?
The expense ratio of MBB is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%). MBB is mostly comprised of AAA bonds while VBK has a high exposure to the technology sector. Overall, MBB has provided lower returns than VBK over the past 11 years.
In this article, we’ll compare MBB vs. VBK. We’ll look at portfolio growth and risk metrics, as well as at their holdings and annual returns. Moreover, I’ll also discuss MBB’s and VBK’s industry exposure, fund composition, and performance and examine how these affect their overall returns.
Summary
| MBB | VBK | |
| Name | iShares MBS ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Intermediate Government | Small Growth |
| Issuer | iShares | Vanguard |
| AUM | 25.69B | 37.89B |
| Avg. Return | 3.08% | 16.53% |
| Div. Yield | 1.88% | 0.45% |
| Expense Ratio | 0.06% | 0.07% |
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 Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
MBB’s dividend yield is 1.43% higher than that of VBK (1.88% vs. 0.45%). Also, MBB yielded on average 13.45% less per year over the past decade (3.08% vs. 16.53%). The expense ratio of MBB is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%).
Fund Composition
Holdings
| MBB Bond Sectors | Weight |
| AAA | 99.51% |
| Others | 0.49% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
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.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| MBB | VBK | |
| Mean Return | 0.2 | 1.22 |
| R-squared | 74.38 | 80.56 |
| Std. Deviation | 2.12 | 17.95 |
| Alpha | 0.14 | -2.81 |
| Beta | 0.6 | 1.18 |
| Sharpe Ratio | 0.87 | 0.78 |
| Treynor Ratio | 3.02 | 11.18 |
The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a Sharpe Ratio of 0.87 and a R-squared of 74.38. Its Alpha is 0.14 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Standard Deviation of 2.12 and a Beta of 0.6.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Alpha of -2.81 and a Sharpe Ratio of 0.78. Its Beta is 1.18 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a R-squared of 80.56 and a Mean Return of 1.22.
MBB’s Mean Return is 1.02 points lower than that of VBK and its R-squared is 6.18 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than VBK. The Alpha and Beta of MBB are 2.95 points higher and 0.58 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | MBB | VBK |
| 2020 | 4.03% | 35.29% |
| 2019 | 6.27% | 32.75% |
| 2018 | 0.81% | -5.68% |
| 2017 | 2.37% | 21.9% |
| 2016 | 1.28% | 10.74% |
| 2015 | 1.28% | -2.51% |
| 2014 | 6.16% | 4.02% |
| 2013 | -1.92% | 38.18% |
| 2012 | 2.23% | 17.67% |
| 2011 | 5.88% | -1.43% |
| 2010 | 5.44% | 30.87% |
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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MBB | $10,000 | $13,906 | 3.08% |
| VBK | $10,000 | $48,639 | 16.53% |
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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
MBB’s CAGR is 13.45 percentage points lower than that of VBK and as a result, would have yielded $34,733 less on a $10,000 investment. Thus, MBB performed worse than VBK by 13.45% annually.
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