The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between VTI and MBB? And which fund is better?
The expense ratio of VTI is 0.03 percentage points lower than MBB’s (0.03% vs. 0.06%). VTI also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than MBB over the past ten years.
In this article, we’ll compare VTI vs. MBB. We’ll look at risk metrics and portfolio growth, as well as at their industry exposure and holdings. Moreover, I’ll also discuss VTI’s and MBB’s annual returns, fund composition, and performance and examine how these affect their overall returns.
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Summary
| VTI | MBB | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | iShares MBS ETF |
| Category | Large Blend | Intermediate Government |
| Issuer | Vanguard | iShares |
| AUM | 1.26T | 25.69B |
| Avg. Return | 14.70% | 3.08% |
| Div. Yield | 1.26% | 1.88% |
| Expense Ratio | 0.03% | 0.06% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
VTI’s dividend yield is 0.62% lower than that of MBB (1.26% vs. 1.88%). Also, VTI yielded on average 11.62% more per year over the past decade (14.70% vs. 3.08%). The expense ratio of VTI is 0.03 percentage points lower than MBB’s (0.03% vs. 0.06%).
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Fund Composition
Holdings
| VTI Holdings | Weight |
| Apple Inc | 4.9% |
| Microsoft Corp | 4.6% |
| Amazon.com Inc | 3.33% |
| Facebook Inc Class A | 1.88% |
| Alphabet Inc Class A | 1.66% |
| Alphabet Inc Class C | 1.56% |
| Tesla Inc | 1.18% |
| Berkshire Hathaway Inc Class B | 1.09% |
| NVIDIA Corp | 1.07% |
| JPMorgan Chase & Co | 1.06% |
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
| MBB Bond Sectors | Weight |
| AAA | 99.51% |
| Others | 0.49% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Performance
Annual Returns
| Year | VTI | MBB |
| 2020 | 20.95% | 4.03% |
| 2019 | 30.8% | 6.27% |
| 2018 | -5.13% | 0.81% |
| 2017 | 21.16% | 2.37% |
| 2016 | 12.68% | 1.28% |
| 2015 | 0.4% | 1.28% |
| 2014 | 12.56% | 6.16% |
| 2013 | 33.51% | -1.92% |
| 2012 | 16.41% | 2.23% |
| 2011 | 1.06% | 5.88% |
| 2010 | 17.26% | 5.44% |
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% respectively.
The year 2019 was the strongest year for MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $42,648 | 14.70% |
| MBB | $10,000 | $13,906 | 3.08% |
A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
With a $10,000 investment in MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.
VTI’s CAGR is 11.62 percentage points higher than that of MBB and as a result, would have yielded $28,742 more on a $10,000 investment. Thus, VTI outperformed MBB by 11.62% annually.
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