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VGT vs. MUB: What’s The Difference?

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

The expense ratio of VGT is 0.03 percentage points higher than MUB’s (0.1% vs. 0.07%). VGT also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, VGT has provided higher returns than MUB over the past ten years.

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

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Summary

VGTMUB
NameVanguard Information Technology Index Fund ETF SharesiShares National Muni Bond ETF
CategoryTechnologyMuni National Interm
IssuerVanguardiShares
AUM54.13B22.71B
Avg. Return20.84%4.04%
Div. Yield0.66%1.96%
Expense Ratio0.1%0.07%

The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.

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%.

VGT’s dividend yield is 1.30% lower than that of MUB (0.66% vs. 1.96%). Also, VGT yielded on average 16.80% more per year over the past decade (20.84% vs. 4.04%). The expense ratio of VGT is 0.03 percentage points higher than MUB’s (0.1% vs. 0.07%).

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Fund Composition

Holdings

VGT - Holdings

VGT HoldingsWeight
Apple Inc19.58%
Microsoft Corp16.53%
NVIDIA Corp4.22%
Visa Inc Class A3.16%
PayPal Holdings Inc2.76%
Mastercard Inc Class A2.76%
Adobe Inc2.39%
Intel Corp1.94%
Salesforce.com Inc1.91%
Cisco Systems Inc1.9%

VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.

Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.

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

VGTMUB
Mean Return1.760.32
R-squared74.8499
Std. Deviation16.613.68
Alpha10.41-0.46
Beta1.021.01
Sharpe Ratio1.230.88
Treynor Ratio20.553.2

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a Alpha of 10.41 and a Treynor Ratio of 20.55. Its R-squared is 74.84 while VGT’s Standard Deviation is 16.61. Furthermore, the fund has a Beta of 1.02 and a Sharpe Ratio of 1.23.

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

VGT’s Mean Return is 1.44 points higher than that of MUB and its R-squared is 24.16 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than MUB. The Alpha and Beta of VGT are 10.87 points higher and 0.01 points higher than MUB’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. MUB - Annual Returns

YearVGTMUB
202045.94%4.87%
201948.68%7.28%
20182.52%0.86%
201737.07%4.61%
201613.73%0.06%
20155.02%2.99%
201418.01%8.61%
201330.91%-3.26%
201214.05%6.14%
20110.52%10.85%
201012.74%1.4%

VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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

VGT vs. MUB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
MUB$10,000$15,3334.04%

A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

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%.

VGT’s CAGR is 16.80 percentage points higher than that of MUB and as a result, would have yielded $57,385 more on a $10,000 investment. Thus, VGT outperformed MUB by 16.80% annually.


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