The iShares MBS ETF (MBB) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between MBB and VGK? And which fund is better?
The expense ratio of MBB is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%). MBB is mostly comprised of AAA bonds while VGK has a high exposure to the financial services sector. Overall, MBB has provided lower returns than VGK over the past 11 years.
In this article, we’ll compare MBB vs. VGK. We’ll look at portfolio growth and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss MBB’s and VGK’s fund composition, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||iShares MBS ETF||Vanguard FTSE Europe Index Fund ETF Shares|
|Category||Intermediate Government||Europe Stock|
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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
MBB’s dividend yield is 0.64% lower than that of VGK (1.88% vs. 2.52%). Also, MBB yielded on average 3.60% less per year over the past decade (3.08% vs. 6.68%). The expense ratio of MBB is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%).
|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.
|ASML Holding NV||2.2%|
|Roche Holding AG||2.13%|
|LVMH Moet Hennessy Louis Vuitton SE||1.58%|
|Novo Nordisk A/S B||1.09%|
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
The iShares MBS ETF (MBB) has a Mean Return of 0.2 with a Standard Deviation of 2.12 and a Treynor Ratio of 3.02. Its Sharpe Ratio is 0.87 while MBB’s Alpha is 0.14. Furthermore, the fund has a Beta of 0.6 and a R-squared of 74.38.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Standard Deviation of 16.65 with a Treynor Ratio of 5.12 and a Sharpe Ratio of 0.4. Its Beta is 1.06 while VGK’s R-squared is 92.76. Furthermore, the fund has a Alpha of 0.45 and a Mean Return of 0.61.
MBB’s Mean Return is 0.41 points lower than that of VGK and its R-squared is 18.38 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than VGK. The Alpha and Beta of MBB are 0.31 points lower and 0.46 points lower than VGK’s Alpha and Beta.
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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% 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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.
MBB’s CAGR is 3.60 percentage points lower than that of VGK and as a result, would have yielded $4,444 less on a $10,000 investment. Thus, MBB performed worse than VGK by 3.60% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.