The iShares National Muni Bond ETF (MUB) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between MUB and VXF? And which fund is better?
The expense ratio of MUB is 0.01 percentage points higher than VXF’s (0.07% vs. 0.06%). MUB is mostly comprised of AA bonds while VXF has a high exposure to the technology sector. Overall, MUB has provided lower returns than VXF over the past 11 years.
In this article, we’ll compare MUB vs. VXF. We’ll look at industry exposure and risk metrics, as well as at their holdings and fund composition. Moreover, I’ll also discuss MUB’s and VXF’s annual returns, portfolio growth, and performance and examine how these affect their overall returns.
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Summary
| MUB | VXF | |
| Name | iShares National Muni Bond ETF | Vanguard Extended Market Index Fund ETF Shares |
| Category | Muni National Interm | Mid-Cap Growth |
| Issuer | iShares | Vanguard |
| AUM | 22.71B | 114.53B |
| Avg. Return | 4.04% | 15.47% |
| Div. Yield | 1.96% | 1.19% |
| Expense Ratio | 0.07% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
MUB’s dividend yield is 0.77% higher than that of VXF (1.96% vs. 1.19%). Also, MUB yielded on average 11.44% less per year over the past decade (4.04% vs. 15.47%). The expense ratio of MUB is 0.01 percentage points higher than VXF’s (0.07% vs. 0.06%).
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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.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| MUB | VXF | |
| Mean Return | 0.32 | 1.24 |
| R-squared | 99 | 85.73 |
| Std. Deviation | 3.68 | 18.04 |
| Alpha | -0.46 | -3.26 |
| Beta | 1.01 | 1.23 |
| Sharpe Ratio | 0.88 | 0.79 |
| Treynor Ratio | 3.2 | 10.92 |
The iShares National Muni Bond ETF (MUB) has a Sharpe Ratio of 0.88 with a R-squared of 99 and a Alpha of -0.46. Its Mean Return is 0.32 while MUB’s Treynor Ratio is 3.2. Furthermore, the fund has a Standard Deviation of 3.68 and a Beta of 1.01.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Beta of 1.23 and a Alpha of -3.26. Its R-squared is 85.73 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Mean Return of 1.24 and a Standard Deviation of 18.04.
MUB’s Mean Return is 0.92 points lower than that of VXF and its R-squared is 13.27 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than VXF. The Alpha and Beta of MUB are 2.80 points higher and 0.22 points lower than VXF’s Alpha and Beta.
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Performance
Annual Returns
| Year | MUB | VXF |
| 2020 | 4.87% | 32.19% |
| 2019 | 7.28% | 28.04% |
| 2018 | 0.86% | -9.37% |
| 2017 | 4.61% | 18.1% |
| 2016 | 0.06% | 16.16% |
| 2015 | 2.99% | -3.26% |
| 2014 | 8.61% | 7.55% |
| 2013 | -3.26% | 38.37% |
| 2012 | 6.14% | 18.48% |
| 2011 | 10.85% | -3.61% |
| 2010 | 1.4% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MUB | $10,000 | $15,333 | 4.04% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
MUB’s CAGR is 11.44 percentage points lower than that of VXF and as a result, would have yielded $28,797 less on a $10,000 investment. Thus, MUB performed worse than VXF by 11.44% annually.
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