The iShares National Muni Bond ETF (MUB) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and VHT is a Vanguard Health fund. So, what’s the difference between MUB and VHT? And which fund is better?
The expense ratio of MUB is 0.03 percentage points lower than VHT’s (0.07% vs. 0.1%). MUB is mostly comprised of AA bonds while VHT has a high exposure to the healthcare sector. Overall, MUB has provided lower returns than VHT over the past 11 years.
In this article, we’ll compare MUB vs. VHT. We’ll look at industry exposure and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss MUB’s and VHT’s fund composition, risk metrics, and performance and examine how these affect their overall returns.
Summary
| MUB | VHT | |
| Name | iShares National Muni Bond ETF | Vanguard Health Care Index Fund ETF Shares |
| Category | Muni National Interm | Health |
| Issuer | iShares | Vanguard |
| AUM | 22.71B | 17.94B |
| Avg. Return | 4.04% | 16.04% |
| Div. Yield | 1.96% | 1.15% |
| Expense Ratio | 0.07% | 0.1% |
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
MUB’s dividend yield is 0.81% higher than that of VHT (1.96% vs. 1.15%). Also, MUB yielded on average 12.00% less per year over the past decade (4.04% vs. 16.04%). The expense ratio of MUB is 0.03 percentage points lower than VHT’s (0.07% vs. 0.1%).
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.
| VHT Holdings | Weight |
| Johnson & Johnson | 7.34% |
| UnitedHealth Group Inc | 6.44% |
| Pfizer Inc | 3.7% |
| Abbott Laboratories | 3.48% |
| Thermo Fisher Scientific Inc | 3.37% |
| AbbVie Inc | 3.37% |
| Merck & Co Inc | 3.33% |
| Eli Lilly and Co | 3.17% |
| Danaher Corp | 2.91% |
| Medtronic PLC | 2.83% |
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
Risk Analysis
| MUB | VHT | |
| Mean Return | 0.32 | 1.33 |
| R-squared | 99 | 59.86 |
| Std. Deviation | 3.68 | 13.58 |
| Alpha | -0.46 | 7.99 |
| Beta | 1.01 | 0.75 |
| Sharpe Ratio | 0.88 | 1.13 |
| Treynor Ratio | 3.2 | 20.74 |
The iShares National Muni Bond ETF (MUB) has a Treynor Ratio of 3.2 with a Sharpe Ratio of 0.88 and a Beta of 1.01. Its Mean Return is 0.32 while MUB’s R-squared is 99. Furthermore, the fund has a Standard Deviation of 3.68 and a Alpha of -0.46.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Sharpe Ratio of 1.13 with a Beta of 0.75 and a Treynor Ratio of 20.74. Its Alpha is 7.99 while VHT’s Standard Deviation is 13.58. Furthermore, the fund has a Mean Return of 1.33 and a R-squared of 59.86.
MUB’s Mean Return is 1.01 points lower than that of VHT and its R-squared is 39.14 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than VHT. The Alpha and Beta of MUB are 8.45 points lower and 0.26 points higher than VHT’s Alpha and Beta.
Performance
Annual Returns
| Year | MUB | VHT |
| 2020 | 4.87% | 18.21% |
| 2019 | 7.28% | 21.97% |
| 2018 | 0.86% | 5.55% |
| 2017 | 4.61% | 23.34% |
| 2016 | 0.06% | -3.33% |
| 2015 | 2.99% | 7.22% |
| 2014 | 8.61% | 25.38% |
| 2013 | -3.26% | 42.67% |
| 2012 | 6.14% | 19.1% |
| 2011 | 10.85% | 10.57% |
| 2010 | 1.4% | 5.75% |
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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MUB | $10,000 | $15,333 | 4.04% |
| VHT | $10,000 | $48,464 | 16.04% |
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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
MUB’s CAGR is 12.00 percentage points lower than that of VHT and as a result, would have yielded $33,131 less on a $10,000 investment. Thus, MUB performed worse than VHT by 12.00% annually.
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