VIG vs. MUB: What’s The Difference?

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

The expense ratio of VIG is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%). VIG also has a high exposure to the industrials sector while MUB is mostly comprised of AA bonds. Overall, VIG has provided higher returns than MUB over the past ten years.

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

Summary

VIG MUB
Name Vanguard Dividend Appreciation Index Fund ETF Shares iShares National Muni Bond ETF
Category Large Blend Muni National Interm
Issuer Vanguard iShares
AUM 71.92B 22.71B
Avg. Return 13.35% 4.04%
Div. Yield 1.56% 1.96%
Expense Ratio 0.06% 0.07%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

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%.

VIG’s dividend yield is 0.40% lower than that of MUB (1.56% vs. 1.96%). Also, VIG yielded on average 9.31% more per year over the past decade (13.35% vs. 4.04%). The expense ratio of VIG is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%).

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Fund Composition

Holdings

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
Visa Inc Class A 3.22%
UnitedHealth Group Inc 3.22%
The Home Depot Inc 2.91%
Procter & Gamble Co 2.82%
Comcast Corp Class A 2.21%
Coca-Cola Co 1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

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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Risk Analysis

VIG MUB
Mean Return 1.09 0.32
R-squared 92.2 99
Std. Deviation 12.25 3.68
Alpha 0.12 -0.46
Beta 0.86 1.01
Sharpe Ratio 1.01 0.88
Treynor Ratio 14.33 3.2

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Standard Deviation of 12.25 with a R-squared of 92.2 and a Mean Return of 1.09. Its Beta is 0.86 while VIG’s Alpha is 0.12. Furthermore, the fund has a Treynor Ratio of 14.33 and a Sharpe Ratio of 1.01.

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

VIG’s Mean Return is 0.77 points higher than that of MUB and its R-squared is 6.80 points lower. With a Standard Deviation of 12.25, VIG is slightly more volatile than MUB. The Alpha and Beta of VIG are 0.58 points higher and 0.15 points lower than MUB’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. MUB - Annual Returns

Year VIG MUB
2020 15.46% 4.87%
2019 29.71% 7.28%
2018 -2.02% 0.86%
2017 22.22% 4.61%
2016 11.84% 0.06%
2015 -1.95% 2.99%
2014 10.06% 8.61%
2013 28.99% -3.26%
2012 11.61% 6.14%
2011 6.21% 10.85%
2010 14.67% 1.4%

VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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

VIG vs. MUB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $37,951 13.35%
MUB $10,000 $15,333 4.04%

A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

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%.

VIG’s CAGR is 9.31 percentage points higher than that of MUB and as a result, would have yielded $22,618 more on a $10,000 investment. Thus, VIG outperformed MUB by 9.31% annually.


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