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VB vs. MUB: What’s The Difference?

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

The expense ratio of VB is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%). VB also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, VB has provided higher returns than MUB over the past ten years.

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

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Summary

VBMUB
NameVanguard Small-Cap Index Fund ETF SharesiShares National Muni Bond ETF
CategorySmall BlendMuni National Interm
IssuerVanguardiShares
AUM137.72B22.71B
Avg. Return14.25%4.04%
Div. Yield1.14%1.96%
Expense Ratio0.05%0.07%

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 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%.

VB’s dividend yield is 0.82% lower than that of MUB (1.14% vs. 1.96%). Also, VB yielded on average 10.22% more per year over the past decade (14.25% vs. 4.04%). The expense ratio of VB is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%).

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Fund Composition

Holdings

VB - Holdings

VB HoldingsWeight
Charles River Laboratories International Inc0.34%
Pool Corp0.32%
Bio-Techne Corp0.32%
Avantor Inc0.32%
PerkinElmer Inc0.31%
Diamondback Energy Inc0.31%
VICI Properties Inc Ordinary Shares0.3%
IDEX Corp0.3%
Entegris Inc0.3%
Novavax Inc0.29%

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%.

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

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.

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Risk Analysis

VBMUB
Mean Return1.150.32
R-squared85.0399
Std. Deviation17.823.68
Alpha-4.02-0.46
Beta1.211.01
Sharpe Ratio0.740.88
Treynor Ratio10.153.2

The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Sharpe Ratio of 0.74 with a R-squared of 85.03 and a Treynor Ratio of 10.15. Its Mean Return is 1.15 while VB’s Beta is 1.21. Furthermore, the fund has a Standard Deviation of 17.82 and a Alpha of -4.02.

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

VB’s Mean Return is 0.83 points higher than that of MUB and its R-squared is 13.97 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than MUB. The Alpha and Beta of VB are 3.56 points lower and 0.20 points higher than MUB’s Alpha and Beta.

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Performance

Annual Returns

VB vs. MUB - Annual Returns

YearVBMUB
202019.08%4.87%
201927.37%7.28%
2018-9.3%0.86%
201716.24%4.61%
201618.31%0.06%
2015-3.65%2.99%
20147.51%8.61%
201337.8%-3.26%
201218.22%6.14%
2011-2.68%10.85%
201027.89%1.4%

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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.

Portfolio Growth

VB vs. MUB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VB$10,000$39,73414.25%
MUB$10,000$15,3334.04%

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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.

VB’s CAGR is 10.22 percentage points higher than that of MUB and as a result, would have yielded $24,401 more on a $10,000 investment. Thus, VB outperformed MUB by 10.22% annually.


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