The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VCIT and MUB? And which fund is better?
The expense ratio of VCIT is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%). VCIT is mostly comprised of BBB bonds and MUB has a high exposure to AA bond. Overall, VCIT has provided higher returns than MUB over the past ten years.
In this article, we’ll compare VCIT vs. MUB. We’ll look at risk metrics and portfolio growth, as well as at their annual returns and performance. Moreover, I’ll also discuss VCIT’s and MUB’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||iShares National Muni Bond ETF|
|Category||Corporate Bond||Muni National Interm|
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% 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%.
VCIT’s dividend yield is 0.37% higher than that of MUB (2.33% vs. 1.96%). Also, VCIT yielded on average 1.80% more per year over the past decade (5.84% vs. 4.04%). The expense ratio of VCIT is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%).
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
|MUB Bond Sectors||Weight|
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.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a R-squared of 63.18 with a Mean Return of 0.44 and a Beta of 1.35. Its Alpha is 0.89 while VCIT’s Standard Deviation is 5.08. Furthermore, the fund has a Treynor Ratio of 3.43 and a Sharpe Ratio of 0.91.
The iShares National Muni Bond ETF (MUB) has a Alpha of -0.46 with a Mean Return of 0.32 and a Standard Deviation of 3.68. Its Beta is 1.01 while MUB’s Treynor Ratio is 3.2. Furthermore, the fund has a Sharpe Ratio of 0.88 and a R-squared of 99.
VCIT’s Mean Return is 0.12 points higher than that of MUB and its R-squared is 35.82 points lower. With a Standard Deviation of 5.08, VCIT is slightly more volatile than MUB. The Alpha and Beta of VCIT are 1.35 points higher and 0.34 points higher than MUB’s Alpha and Beta.
VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.
With a $10,000 investment in MUB, the end total would have been $15,121. This equates to a $5,121 profit over 10 years and a compound annual growth rate (CAGR) of 4.04%.
VCIT’s CAGR is 1.80 percentage points higher than that of MUB and as a result, would have yielded $2,318 more on a $10,000 investment. Thus, VCIT outperformed MUB by 1.80% annually.
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