The iShares National Muni Bond ETF (MUB) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and IEF is a iShares Long Government fund. So, what’s the difference between MUB and IEF? And which fund is better?
The expense ratio of MUB is 0.08 percentage points lower than IEF’s (0.07% vs. 0.15%). MUB is mostly comprised of AA bonds and IEF has a high exposure to AAA bond. Overall, MUB has provided lower returns than IEF over the past 11 years.
In this article, we’ll compare MUB vs. IEF. We’ll look at performance and risk metrics, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss MUB’s and IEF’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
|Name||iShares National Muni Bond ETF||iShares 7-10 Year Treasury Bond ETF|
|Category||Muni National Interm||Long Government|
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 iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
MUB’s dividend yield is 1.12% higher than that of IEF (1.96% vs. 0.84%). Also, MUB yielded on average 1.02% less per year over the past decade (4.04% vs. 5.06%). The expense ratio of MUB is 0.08 percentage points lower than IEF’s (0.07% vs. 0.15%).
|MUB Bond Sectors||Weight|
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.
|IEF Bond Sectors||Weight|
IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
The iShares National Muni Bond ETF (MUB) has a Sharpe Ratio of 0.88 with a Beta of 1.01 and a Treynor Ratio of 3.2. Its Standard Deviation is 3.68 while MUB’s Mean Return is 0.32. Furthermore, the fund has a Alpha of -0.46 and a R-squared of 99.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a Beta of 1.59 with a Alpha of -1.2 and a Treynor Ratio of 1.97. Its R-squared is 77.56 while IEF’s Sharpe Ratio is 0.6. Furthermore, the fund has a Mean Return of 0.32 and a Standard Deviation of 5.42.
MUB’s Mean Return is 0.00 points lower than that of IEF and its R-squared is 21.44 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than IEF. The Alpha and Beta of MUB are 0.74 points higher and 0.58 points lower than IEF’s Alpha and Beta.
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 IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.
MUB’s CAGR is 1.02 percentage points lower than that of IEF and as a result, would have yielded $1,603 less on a $10,000 investment. Thus, MUB performed worse than IEF by 1.02% annually.
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