The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VEU and MUB? And which fund is better?
The expense ratio of VEU is 0.01 percentage points higher than MUB’s (0.08% vs. 0.07%). VEU also has a high exposure to the financial services sector while MUB is mostly comprised of AA bonds. Overall, VEU has provided higher returns than MUB over the past ten years.
In this article, we’ll compare VEU vs. MUB. We’ll look at annual returns and performance, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss VEU’s and MUB’s risk metrics, holdings, and fund composition and examine how these affect their overall returns.
Summary
| VEU | MUB | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | iShares National Muni Bond ETF |
| Category | Foreign Large Blend | Muni National Interm |
| Issuer | Vanguard | iShares |
| AUM | 53.64B | 22.71B |
| Avg. Return | 6.64% | 4.04% |
| Div. Yield | 2.31% | 1.96% |
| Expense Ratio | 0.08% | 0.07% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
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%.
VEU’s dividend yield is 0.35% higher than that of MUB (2.31% vs. 1.96%). Also, VEU yielded on average 2.60% more per year over the past decade (6.64% vs. 4.04%). The expense ratio of VEU is 0.01 percentage points higher than MUB’s (0.08% vs. 0.07%).
Fund Composition
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| 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.
Risk Analysis
| VEU | MUB | |
| Mean Return | 0.56 | 0.32 |
| R-squared | 98.44 | 99 |
| Std. Deviation | 15.08 | 3.68 |
| Alpha | 0.28 | -0.46 |
| Beta | 0.99 | 1.01 |
| Sharpe Ratio | 0.4 | 0.88 |
| Treynor Ratio | 5.12 | 3.2 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Sharpe Ratio of 0.4 with a Treynor Ratio of 5.12 and a Mean Return of 0.56. Its R-squared is 98.44 while VEU’s Standard Deviation is 15.08. Furthermore, the fund has a Alpha of 0.28 and a Beta of 0.99.
The iShares National Muni Bond ETF (MUB) has a Beta of 1.01 with a Treynor Ratio of 3.2 and a Alpha of -0.46. Its Sharpe Ratio is 0.88 while MUB’s R-squared is 99. Furthermore, the fund has a Mean Return of 0.32 and a Standard Deviation of 3.68.
VEU’s Mean Return is 0.24 points higher than that of MUB and its R-squared is 0.56 points lower. With a Standard Deviation of 15.08, VEU is slightly more volatile than MUB. The Alpha and Beta of VEU are 0.74 points higher and 0.02 points lower than MUB’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | MUB |
| 2020 | 11.39% | 4.87% |
| 2019 | 21.63% | 7.28% |
| 2018 | -13.97% | 0.86% |
| 2017 | 27.27% | 4.61% |
| 2016 | 4.77% | 0.06% |
| 2015 | -4.67% | 2.99% |
| 2014 | -4.05% | 8.61% |
| 2013 | 14.5% | -3.26% |
| 2012 | 18.55% | 6.14% |
| 2011 | -14.25% | 10.85% |
| 2010 | 11.85% | 1.4% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| MUB | $10,000 | $15,333 | 4.04% |
A $10,000 investment in VEU would have resulted in a final balance of $18,507. This is a profit of $8,507 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
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%.
VEU’s CAGR is 2.60 percentage points higher than that of MUB and as a result, would have yielded $3,174 more on a $10,000 investment. Thus, VEU outperformed MUB by 2.60% annually.
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