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VTIP vs. IUSB: What’s The Difference?

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VTIP is a Vanguard Inflation-Protected Bond fund and IUSB is a iShares N/A fund. So, what’s the difference between VTIP and IUSB? And which fund is better?

The expense ratio of VTIP is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%). VTIP is mostly comprised of AAA bonds and IUSB has a high exposure to AAA bond. Overall, VTIP has provided lower returns than IUSB over the past 6 years.

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

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Summary

VTIPIUSB
NameVanguard Short-Term Inflation-Protected Securities Index Fund ETF SharesiShares Core Total USD Bond Market ETF
CategoryInflation-Protected BondN/A
IssuerVanguardiShares
AUM50.67B14.49B
Avg. Return1.79%4.13%
Div. Yield1.35%2.1%
Expense Ratio0.05%0.06%

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.

The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VTIP’s dividend yield is 0.75% lower than that of IUSB (1.35% vs. 2.1%). Also, VTIP yielded on average 2.34% less per year over the past decade (1.79% vs. 4.13%). The expense ratio of VTIP is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%).

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Fund Composition

Holdings

VTIP - Holdings

VTIP Bond SectorsWeight
AAA99.87%
Others0.13%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

VTIPIUSB
Mean Return00
R-squared00
Std. Deviation00
Alpha00
Beta00
Sharpe Ratio00
Treynor Ratio00

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a R-squared of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Standard Deviation is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.

The iShares Core Total USD Bond Market ETF (IUSB) has a R-squared of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Standard Deviation is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.

VTIP’s Mean Return is 0.00 points lower than that of IUSB and its R-squared is 0.00 points lower. With a Standard Deviation of 0, VTIP is slightly less volatile than IUSB. The Alpha and Beta of VTIP are 0.00 points lower and 0.00 points lower than IUSB’s Alpha and Beta.

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Performance

Annual Returns

VTIP vs. IUSB - Annual Returns

YearVTIPIUSB
20204.97%7.59%
20194.83%9.26%
20180.54%-0.38%
20170.82%4.06%
20162.71%3.78%
2015-0.15%0.46%
2014-1.17%0.0%
2013-1.55%0.0%
20120.0%0.0%
20110.0%0.0%
20100.0%0.0%

VTIP had its best year in 2020 with an annual return of 4.97%. VTIP’s worst year over the past decade yielded -1.55% and occurred in 2013. In most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares provided moderate returns such as in 2011, 2010, and 2018 where annual returns amounted to 0.0%, 0.0%, and 0.54% respectively.

The year 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VTIP vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTIP$10,000$11,4391.79%
IUSB$10,000$12,7044.13%

A $10,000 investment in VTIP would have resulted in a final balance of $11,439. This is a profit of $1,439 over 6 years and amounts to a compound annual growth rate (CAGR) of 1.79%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VTIP’s CAGR is 2.34 percentage points lower than that of IUSB and as a result, would have yielded $1,265 less on a $10,000 investment. Thus, VTIP performed worse than IUSB by 2.34% annually.


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