The Vanguard S&P 500 ETF (VOO) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VOO and MUB? And which fund is better?
The expense ratio of VOO is 0.04 percentage points lower than MUB’s (0.03% vs. 0.07%). VOO also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, VOO has provided higher returns than MUB over the past ten years.
In this article, we’ll compare VOO vs. MUB. We’ll look at fund composition and annual returns, as well as at their holdings and performance. Moreover, I’ll also discuss VOO’s and MUB’s risk metrics, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| VOO | MUB | |
| Name | Vanguard S&P 500 ETF | iShares National Muni Bond ETF |
| Category | Large Blend | Muni National Interm |
| Issuer | Vanguard | iShares |
| AUM | 753.41B | 22.71B |
| Avg. Return | 14.45% | 4.04% |
| Div. Yield | 1.34% | 1.96% |
| Expense Ratio | 0.03% | 0.07% |
The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.
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%.
VOO’s dividend yield is 0.62% lower than that of MUB (1.34% vs. 1.96%). Also, VOO yielded on average 10.41% more per year over the past decade (14.45% vs. 4.04%). The expense ratio of VOO is 0.04 percentage points lower than MUB’s (0.03% vs. 0.07%).
Fund Composition
Holdings
| VOO Holdings | Weight |
| Apple Inc | 5.92% |
| Microsoft Corp | 5.62% |
| Amazon.com Inc | 4.06% |
| Facebook Inc Class A | 2.29% |
| Alphabet Inc Class A | 2.02% |
| Alphabet Inc Class C | 1.97% |
| Tesla Inc | 1.44% |
| Berkshire Hathaway Inc Class B | 1.44% |
| NVIDIA Corp | 1.37% |
| JPMorgan Chase & Co | 1.3% |
VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.
| 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.
Performance
Annual Returns
| Year | VOO | MUB |
| 2020 | 18.35% | 4.87% |
| 2019 | 31.46% | 7.28% |
| 2018 | -4.42% | 0.86% |
| 2017 | 21.78% | 4.61% |
| 2016 | 11.93% | 0.06% |
| 2015 | 1.35% | 2.99% |
| 2014 | 13.63% | 8.61% |
| 2013 | 32.33% | -3.26% |
| 2012 | 15.98% | 6.14% |
| 2011 | 2.09% | 10.85% |
| 2010 | 0.0% | 1.4% |
VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% 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 |
| VOO | $10,000 | $36,575 | 14.45% |
| MUB | $10,000 | $15,121 | 4.04% |
A $10,000 investment in VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.
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%.
VOO’s CAGR is 10.41 percentage points higher than that of MUB and as a result, would have yielded $21,454 more on a $10,000 investment. Thus, VOO outperformed MUB by 10.41% annually.
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