VEA vs. MUB: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VEA and MUB? And which fund is better?

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

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

Summary

VEA MUB
Name Vanguard FTSE Developed Markets Index Fund ETF Shares iShares National Muni Bond ETF
Category Foreign Large Blend Muni National Interm
Issuer Vanguard iShares
AUM 157.48B 22.71B
Avg. Return 7.05% 4.04%
Div. Yield 2.49% 1.96%
Expense Ratio 0.05% 0.07%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% 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%.

VEA’s dividend yield is 0.53% higher than that of MUB (2.49% vs. 1.96%). Also, VEA yielded on average 3.01% more per year over the past decade (7.05% vs. 4.04%). The expense ratio of VEA is 0.02 percentage points lower than MUB’s (0.05% vs. 0.07%).

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Fund Composition

Holdings

VEA - Holdings

VEA Holdings Weight
Nestle SA 1.5%
Samsung Electronics Co Ltd 1.4%
ASML Holding NV 1.16%
Roche Holding AG 1.1%
Toyota Motor Corp 0.92%
LVMH Moet Hennessy Louis Vuitton SE 0.84%
Novartis AG 0.82%
Shopify Inc A 0.7%
AstraZeneca PLC 0.67%
SAP SE 0.66%

VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.

LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.

MUB - 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.

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Performance

Annual Returns

VEA vs. MUB - Annual Returns

Year VEA MUB
2020 10.29% 4.87%
2019 22.08% 7.28%
2018 -14.47% 0.86%
2017 26.44% 4.61%
2016 2.51% 0.06%
2015 -0.21% 2.99%
2014 -5.71% 8.61%
2013 22.12% -3.26%
2012 18.6% 6.14%
2011 -12.57% 10.85%
2010 8.47% 1.4%

VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% 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

VEA vs. MUB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
MUB $10,000 $15,333 4.04%

A $10,000 investment in VEA would have resulted in a final balance of $19,290. This is a profit of $9,290 over 11 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

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%.

VEA’s CAGR is 3.01 percentage points higher than that of MUB and as a result, would have yielded $3,957 more on a $10,000 investment. Thus, VEA outperformed MUB by 3.01% annually.


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