The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between VB and MBB? And which fund is better?
The expense ratio of VB is 0.01 percentage points lower than MBB’s (0.05% vs. 0.06%). VB also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, VB has provided higher returns than MBB over the past ten years.
In this article, we’ll compare VB vs. MBB. We’ll look at portfolio growth and performance, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VB’s and MBB’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares MBS ETF|
|Category||Small Blend||Intermediate Government|
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
VB’s dividend yield is 0.74% lower than that of MBB (1.14% vs. 1.88%). Also, VB yielded on average 11.18% more per year over the past decade (14.25% vs. 3.08%). The expense ratio of VB is 0.01 percentage points lower than MBB’s (0.05% vs. 0.06%).
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|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
|MBB Bond Sectors||Weight|
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 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.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Alpha of -4.02 and a R-squared of 85.03. Its Sharpe Ratio is 0.74 while VB’s Mean Return is 1.15. Furthermore, the fund has a Treynor Ratio of 10.15 and a Standard Deviation of 17.82.
The iShares MBS ETF (MBB) has a Sharpe Ratio of 0.87 with a Alpha of 0.14 and a Mean Return of 0.2. Its Treynor Ratio is 3.02 while MBB’s Beta is 0.6. Furthermore, the fund has a R-squared of 74.38 and a Standard Deviation of 2.12.
VB’s Mean Return is 0.95 points higher than that of MBB and its R-squared is 10.65 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than MBB. The Alpha and Beta of VB are 4.16 points lower and 0.61 points higher than MBB’s Alpha and Beta.
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VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2019 was the strongest year for MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.
VB’s CAGR is 11.18 percentage points higher than that of MBB and as a result, would have yielded $25,828 more on a $10,000 investment. Thus, VB outperformed MBB by 11.18% annually.
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