MUB vs. VOE: What’s The Difference?

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

MUB and VOE have the same expense ratio: 0.07%. MUB is mostly comprised of AA bonds while VOE has a high exposure to the financial services sector. Overall, MUB has provided lower returns than VOE over the past 11 years.

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

Summary

MUB VOE
Name iShares National Muni Bond ETF Vanguard Mid-Cap Value Index Fund ETF Shares
Category Muni National Interm Mid-Cap Value
Issuer iShares Vanguard
AUM 22.71B 26.78B
Avg. Return 4.04% 12.52%
Div. Yield 1.96% 1.87%
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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

MUB’s dividend yield is 0.09% higher than that of VOE (1.96% vs. 1.87%). Also, MUB yielded on average 8.49% less per year over the past decade (4.04% vs. 12.52%). MUB and VOE have the same expense ratio: 0.07%.

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

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.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

MUB VOE
Mean Return 0.32 1.05
R-squared 99 88.76
Std. Deviation 3.68 15.98
Alpha -0.46 -3.77
Beta 1.01 1.11
Sharpe Ratio 0.88 0.75
Treynor Ratio 3.2 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Standard Deviation of 15.98 with a Treynor Ratio of 10.19 and a Beta of 1.11. Its Sharpe Ratio is 0.75 while VOE’s R-squared is 88.76. Furthermore, the fund has a Mean Return of 1.05 and a Alpha of -3.77.

MUB’s Mean Return is 0.73 points lower than that of VOE and its R-squared is 10.24 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than VOE. The Alpha and Beta of MUB are 3.31 points higher and 0.10 points lower than VOE’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

MUB vs. VOE - Annual Returns

Year MUB VOE
2020 4.87% 2.5%
2019 7.28% 27.98%
2018 0.86% -12.41%
2017 4.61% 17.05%
2016 0.06% 15.26%
2015 2.99% -1.8%
2014 8.61% 13.98%
2013 -3.26% 37.65%
2012 6.14% 16.04%
2011 10.85% -0.32%
2010 1.4% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

MUB vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $15,333 4.04%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

MUB’s CAGR is 8.49 percentage points lower than that of VOE and as a result, would have yielded $18,322 less on a $10,000 investment. Thus, MUB performed worse than VOE by 8.49% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply