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MUB vs. TLT: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and TLT is a iShares Long Government fund. So, what’s the difference between MUB and TLT? And which fund is better?

The expense ratio of MUB is 0.08 percentage points lower than TLT’s (0.07% vs. 0.15%). MUB is mostly comprised of AA bonds and TLT has a high exposure to AAA bond. Overall, MUB has provided lower returns than TLT over the past 11 years.

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

Summary

MUBTLT
NameiShares National Muni Bond ETFiShares 20+ Year Treasury Bond ETF
CategoryMuni National IntermLong Government
IssueriSharesiShares
AUM22.71B15.15B
Avg. Return4.04%9.00%
Div. Yield1.96%1.5%
Expense Ratio0.07%0.15%

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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

MUB’s dividend yield is 0.46% higher than that of TLT (1.96% vs. 1.5%). Also, MUB yielded on average 4.96% less per year over the past decade (4.04% vs. 9.00%). The expense ratio of MUB is 0.08 percentage points lower than TLT’s (0.07% vs. 0.15%).

Fund Composition

Holdings

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

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.

TLT - Holdings

TLT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TLT’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.

Risk Analysis

MUBTLT
Mean Return0.320.63
R-squared9968.76
Std. Deviation3.6812.76
Alpha-0.46-2.83
Beta1.013.54
Sharpe Ratio0.880.55
Treynor Ratio3.21.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Treynor Ratio of 1.82 with a Beta of 3.54 and a R-squared of 68.76. Its Sharpe Ratio is 0.55 while TLT’s Alpha is -2.83. Furthermore, the fund has a Mean Return of 0.63 and a Standard Deviation of 12.76.

MUB’s Mean Return is 0.31 points lower than that of TLT and its R-squared is 30.24 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than TLT. The Alpha and Beta of MUB are 2.37 points higher and 2.53 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

MUB vs. TLT - Annual Returns

YearMUBTLT
20204.87%17.92%
20197.28%14.93%
20180.86%-2.07%
20174.61%8.92%
20160.06%1.36%
20152.99%-1.65%
20148.61%27.35%
2013-3.26%-13.91%
20126.14%3.25%
201110.85%33.6%
20101.4%9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

MUB vs. TLT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MUB$10,000$15,3334.04%
TLT$10,000$23,8099.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

MUB’s CAGR is 4.96 percentage points lower than that of TLT and as a result, would have yielded $8,476 less on a $10,000 investment. Thus, MUB performed worse than TLT by 4.96% annually.


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