The iShares National Muni Bond ETF (MUB) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between MUB and VTIP? And which fund is better?
The expense ratio of MUB is 0.02 percentage points higher than VTIP’s (0.07% vs. 0.05%). MUB is mostly comprised of AA bonds and VTIP has a high exposure to AAA bond. Overall, MUB has provided higher returns than VTIP over the past 7 years.
In this article, we’ll compare MUB vs. VTIP. We’ll look at annual returns and industry exposure, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss MUB’s and VTIP’s holdings, fund composition, and performance and examine how these affect their overall returns.
Summary
| MUB | VTIP | |
| Name | iShares National Muni Bond ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Muni National Interm | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 22.71B | 50.67B |
| Avg. Return | 4.04% | 1.79% |
| Div. Yield | 1.96% | 1.35% |
| Expense Ratio | 0.07% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
MUB’s dividend yield is 0.61% higher than that of VTIP (1.96% vs. 1.35%). Also, MUB yielded on average 2.24% more per year over the past decade (4.04% vs. 1.79%). The expense ratio of MUB is 0.02 percentage points higher than VTIP’s (0.07% vs. 0.05%).
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.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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
| MUB | VTIP | |
| Mean Return | 0.32 | 0 |
| R-squared | 99 | 0 |
| Std. Deviation | 3.68 | 0 |
| Alpha | -0.46 | 0 |
| Beta | 1.01 | 0 |
| Sharpe Ratio | 0.88 | 0 |
| Treynor Ratio | 3.2 | 0 |
The iShares National Muni Bond ETF (MUB) has a Standard Deviation of 3.68 with a Treynor Ratio of 3.2 and a R-squared of 99. Its Alpha is -0.46 while MUB’s Beta is 1.01. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Mean Return of 0.32.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Beta of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Alpha is 0 while VTIP’s Standard Deviation is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.
MUB’s Mean Return is 0.32 points higher than that of VTIP and its R-squared is 99.00 points higher. With a Standard Deviation of 3.68, MUB is slightly more volatile than VTIP. The Alpha and Beta of MUB are 0.46 points lower and 1.01 points higher than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | MUB | VTIP |
| 2020 | 4.87% | 4.97% |
| 2019 | 7.28% | 4.83% |
| 2018 | 0.86% | 0.54% |
| 2017 | 4.61% | 0.82% |
| 2016 | 0.06% | 2.71% |
| 2015 | 2.99% | -0.15% |
| 2014 | 8.61% | -1.17% |
| 2013 | -3.26% | -1.55% |
| 2012 | 6.14% | 0.0% |
| 2011 | 10.85% | 0.0% |
| 2010 | 1.4% | 0.0% |
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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MUB | $10,000 | $13,285 | 4.04% |
| VTIP | $10,000 | $11,305 | 1.79% |
A $10,000 investment in MUB would have resulted in a final balance of $13,285. This is a profit of $3,285 over 7 years and amounts to a compound annual growth rate (CAGR) of 4.04%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
MUB’s CAGR is 2.24 percentage points higher than that of VTIP and as a result, would have yielded $1,980 more on a $10,000 investment. Thus, MUB outperformed VTIP by 2.24% annually.
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