The iShares MBS ETF (MBB) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and VT is a Vanguard N/A fund. So, what’s the difference between MBB and VT? And which fund is better?

The expense ratio of MBB is 0.02 percentage points lower than VT’s (0.06% vs. 0.08%). MBB is mostly comprised of AAA bonds while VT has a high exposure to the technology sector. Overall, MBB has provided lower returns than VT over the past 11 years.

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

Summary

MBBVT
NameiShares MBS ETFVanguard Total World Stock Index Fund ETF Shares
CategoryIntermediate GovernmentN/A
IssueriSharesVanguard
AUM25.69B30.44B
Avg. Return3.08%10.42%
Div. Yield1.88%1.65%
Expense Ratio0.06%0.08%

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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

MBB’s dividend yield is 0.23% higher than that of VT (1.88% vs. 1.65%). Also, MBB yielded on average 7.34% less per year over the past decade (3.08% vs. 10.42%). The expense ratio of MBB is 0.02 percentage points lower than VT’s (0.06% vs. 0.08%).

Fund Composition

Holdings

MBB - Holdings

MBB Bond SectorsWeight
AAA99.51%
Others0.49%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

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.

VT - Holdings

VT HoldingsWeight
Apple Inc2.85%
Microsoft Corp2.71%
Amazon.com Inc1.98%
Facebook Inc Class A1.1%
Alphabet Inc Class A0.97%
Alphabet Inc Class C0.95%
Tesla Inc0.7%
NVIDIA Corp0.64%
JPMorgan Chase & Co0.62%
Tencent Holdings Ltd0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

Risk Analysis

MBBVT
Mean Return0.20.9
R-squared74.3899.35
Std. Deviation2.1214.19
Alpha0.140.2
Beta0.61.01
Sharpe Ratio0.870.71
Treynor Ratio3.029.5

The iShares MBS ETF (MBB) has a Beta of 0.6 with a R-squared of 74.38 and a Treynor Ratio of 3.02. Its Standard Deviation is 2.12 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Alpha of 0.14 and a Sharpe Ratio of 0.87.

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Alpha of 0.2 and a Treynor Ratio of 9.5. Its Mean Return is 0.9 while VT’s Sharpe Ratio is 0.71. Furthermore, the fund has a R-squared of 99.35 and a Standard Deviation of 14.19.

MBB’s Mean Return is 0.70 points lower than that of VT and its R-squared is 24.97 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than VT. The Alpha and Beta of MBB are 0.06 points lower and 0.41 points lower than VT’s Alpha and Beta.

Performance

Annual Returns

MBB vs. VT - Annual Returns

YearMBBVT
20204.03%16.74%
20196.27%26.8%
20180.81%-9.67%
20172.37%24.19%
20161.28%8.77%
20151.28%-1.88%
20146.16%3.97%
2013-1.92%22.98%
20122.23%17.33%
20115.88%-7.71%
20105.44%13.05%

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 2019 was the strongest year for VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

MBB vs. VT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MBB$10,000$13,9063.08%
VT$10,000$27,73910.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

MBB’s CAGR is 7.34 percentage points lower than that of VT and as a result, would have yielded $13,833 less on a $10,000 investment. Thus, MBB performed worse than VT by 7.34% annually.

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