The iShares National Muni Bond ETF (MUB) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between MUB and VBK? And which fund is better?
MUB and VBK have the same expense ratio: 0.07%. MUB is mostly comprised of AA bonds while VBK has a high exposure to the technology sector. Overall, MUB has provided lower returns than VBK over the past 11 years.
In this article, we’ll compare MUB vs. VBK. We’ll look at annual returns and portfolio growth, as well as at their holdings and industry exposure. Moreover, I’ll also discuss MUB’s and VBK’s performance, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| MUB | VBK | |
| Name | iShares National Muni Bond ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Muni National Interm | Small Growth |
| Issuer | iShares | Vanguard |
| AUM | 22.71B | 37.89B |
| Avg. Return | 4.04% | 16.53% |
| Div. Yield | 1.96% | 0.45% |
| Expense Ratio | 0.07% | 0.07% |
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 Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
MUB’s dividend yield is 1.51% higher than that of VBK (1.96% vs. 0.45%). Also, MUB yielded on average 12.49% less per year over the past decade (4.04% vs. 16.53%). MUB and VBK have the same expense ratio: 0.07%.
Fund Composition
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.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| MUB | VBK | |
| Mean Return | 0.32 | 1.22 |
| R-squared | 99 | 80.56 |
| Std. Deviation | 3.68 | 17.95 |
| Alpha | -0.46 | -2.81 |
| Beta | 1.01 | 1.18 |
| Sharpe Ratio | 0.88 | 0.78 |
| Treynor Ratio | 3.2 | 11.18 |
The iShares National Muni Bond ETF (MUB) has a Beta of 1.01 with a R-squared of 99 and a Alpha of -0.46. Its Mean Return is 0.32 while MUB’s Sharpe Ratio is 0.88. Furthermore, the fund has a Standard Deviation of 3.68 and a Treynor Ratio of 3.2.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Beta of 1.18 and a Mean Return of 1.22. Its Sharpe Ratio is 0.78 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Alpha of -2.81 and a R-squared of 80.56.
MUB’s Mean Return is 0.90 points lower than that of VBK and its R-squared is 18.44 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than VBK. The Alpha and Beta of MUB are 2.35 points higher and 0.17 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | MUB | VBK |
| 2020 | 4.87% | 35.29% |
| 2019 | 7.28% | 32.75% |
| 2018 | 0.86% | -5.68% |
| 2017 | 4.61% | 21.9% |
| 2016 | 0.06% | 10.74% |
| 2015 | 2.99% | -2.51% |
| 2014 | 8.61% | 4.02% |
| 2013 | -3.26% | 38.18% |
| 2012 | 6.14% | 17.67% |
| 2011 | 10.85% | -1.43% |
| 2010 | 1.4% | 30.87% |
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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MUB | $10,000 | $15,333 | 4.04% |
| VBK | $10,000 | $48,639 | 16.53% |
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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
MUB’s CAGR is 12.49 percentage points lower than that of VBK and as a result, would have yielded $33,306 less on a $10,000 investment. Thus, MUB performed worse than VBK by 12.49% annually.
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