MUB vs. BIV: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between MUB and BIV? And which fund is better?

The expense ratio of MUB is 0.02 percentage points higher than BIV’s (0.07% vs. 0.05%). MUB is mostly comprised of AA bonds and BIV has a high exposure to AAA bond. Overall, MUB has provided lower returns than BIV over the past 11 years.

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

Summary

MUB BIV
Name iShares National Muni Bond ETF Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Muni National Interm Intermediate-Term Bond
Issuer iShares Vanguard
AUM 22.71B 39.05B
Avg. Return 4.04% 5.31%
Div. Yield 1.96% 2.06%
Expense Ratio 0.07% 0.05%

The iShares National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

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%.

MUB’s dividend yield is 0.10% lower than that of BIV (1.96% vs. 2.06%). Also, MUB yielded on average 1.28% less per year over the past decade (4.04% vs. 5.31%). The expense ratio of MUB is 0.02 percentage points higher than BIV’s (0.07% vs. 0.05%).

Fund Composition

Holdings

MUB - Holdings

MUB Bond Sectors Weight
AA 60.38%
AAA 18.39%
A 15.04%
BBB 6.0%
Others 0.17%
BB 0.02%
Below B 0.0%
B 0.0%
US Government 0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

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.

Risk Analysis

MUB BIV
Mean Return 0.32 0.35
R-squared 99 95.12
Std. Deviation 3.68 4.09
Alpha -0.46 -0.07
Beta 1.01 1.33
Sharpe Ratio 0.88 0.89
Treynor Ratio 3.2 2.72

The iShares National Muni Bond ETF (MUB) has a Treynor Ratio of 3.2 with a Standard Deviation of 3.68 and a Beta of 1.01. Its R-squared is 99 while MUB’s Mean Return is 0.32. Furthermore, the fund has a Alpha of -0.46 and a Sharpe Ratio of 0.88.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Beta of 1.33 with a Treynor Ratio of 2.72 and a Mean Return of 0.35. Its Standard Deviation is 4.09 while BIV’s Sharpe Ratio is 0.89. Furthermore, the fund has a Alpha of -0.07 and a R-squared of 95.12.

MUB’s Mean Return is 0.03 points lower than that of BIV and its R-squared is 3.88 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than BIV. The Alpha and Beta of MUB are 0.39 points lower and 0.32 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

MUB vs. BIV - Annual Returns

Year MUB BIV
2020 4.87% 9.71%
2019 7.28% 10.19%
2018 0.86% -0.09%
2017 4.61% 3.8%
2016 0.06% 2.86%
2015 2.99% 1.23%
2014 8.61% 7.0%
2013 -3.26% -3.44%
2012 6.14% 7.02%
2011 10.85% 10.62%
2010 1.4% 9.55%

MUB had its best year in 2011 with an annual return of 10.85%. MUB’s worst year over the past decade yielded -3.26% and occurred in 2013. In most years the iShares National Muni Bond ETF provided moderate returns such as in 2015, 2017, and 2020 where annual returns amounted to 2.99%, 4.61%, and 4.87% 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.

Portfolio Growth

MUB vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $15,333 4.04%
BIV $10,000 $17,492 5.31%

A $10,000 investment in MUB would have resulted in a final balance of $15,333. This is a profit of $5,333 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

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%.

MUB’s CAGR is 1.28 percentage points lower than that of BIV and as a result, would have yielded $2,159 less on a $10,000 investment. Thus, MUB performed worse than BIV by 1.28% annually.


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