The Vanguard Value Index Fund ETF Shares (VTV) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VTV and MUB? And which fund is better?
The expense ratio of VTV is 0.03 percentage points lower than MUB’s (0.04% vs. 0.07%). VTV also has a high exposure to the financial services sector while MUB is mostly comprised of AA bonds. Overall, VTV has provided higher returns than MUB over the past ten years.
In this article, we’ll compare VTV vs. MUB. We’ll look at performance and portfolio growth, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss VTV’s and MUB’s industry exposure, fund composition, and holdings and examine how these affect their overall returns.
Summary
| VTV | MUB | |
| Name | Vanguard Value Index Fund ETF Shares | iShares National Muni Bond ETF |
| Category | Large Value | Muni National Interm |
| Issuer | Vanguard | iShares |
| AUM | 125.77B | 22.71B |
| Avg. Return | 12.07% | 4.04% |
| Div. Yield | 2.15% | 1.96% |
| Expense Ratio | 0.04% | 0.07% |
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
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%.
VTV’s dividend yield is 0.19% higher than that of MUB (2.15% vs. 1.96%). Also, VTV yielded on average 8.04% more per year over the past decade (12.07% vs. 4.04%). The expense ratio of VTV is 0.03 percentage points lower than MUB’s (0.04% vs. 0.07%).
Fund Composition
Holdings
| VTV Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.98% |
| JPMorgan Chase & Co | 2.82% |
| Johnson & Johnson | 2.6% |
| UnitedHealth Group Inc | 2.27% |
| Procter & Gamble Co | 1.98% |
| Bank of America Corp | 1.91% |
| Exxon Mobil Corp | 1.6% |
| Comcast Corp Class A | 1.57% |
| Intel Corp | 1.36% |
| Verizon Communications Inc | 1.32% |
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
| 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.
Risk Analysis
| VTV | MUB | |
| Mean Return | 1.05 | 0.32 |
| R-squared | 92.61 | 99 |
| Std. Deviation | 13.78 | 3.68 |
| Alpha | -1.92 | -0.46 |
| Beta | 0.98 | 1.01 |
| Sharpe Ratio | 0.87 | 0.88 |
| Treynor Ratio | 11.94 | 3.2 |
The Vanguard Value Index Fund ETF Shares (VTV) has a Standard Deviation of 13.78 with a Treynor Ratio of 11.94 and a Beta of 0.98. Its Sharpe Ratio is 0.87 while VTV’s Alpha is -1.92. Furthermore, the fund has a R-squared of 92.61 and a Mean Return of 1.05.
The iShares National Muni Bond ETF (MUB) has a Treynor Ratio of 3.2 with a R-squared of 99 and a Alpha of -0.46. Its Standard Deviation is 3.68 while MUB’s Sharpe Ratio is 0.88. Furthermore, the fund has a Mean Return of 0.32 and a Beta of 1.01.
VTV’s Mean Return is 0.73 points higher than that of MUB and its R-squared is 6.39 points lower. With a Standard Deviation of 13.78, VTV is slightly more volatile than MUB. The Alpha and Beta of VTV are 1.46 points lower and 0.03 points lower than MUB’s Alpha and Beta.
Performance
Annual Returns
| Year | VTV | MUB |
| 2020 | 2.23% | 4.87% |
| 2019 | 25.85% | 7.28% |
| 2018 | -5.39% | 0.86% |
| 2017 | 17.12% | 4.61% |
| 2016 | 16.88% | 0.06% |
| 2015 | -0.89% | 2.99% |
| 2014 | 13.19% | 8.61% |
| 2013 | 33.03% | -3.26% |
| 2012 | 15.19% | 6.14% |
| 2011 | 1.16% | 10.85% |
| 2010 | 14.45% | 1.4% |
VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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 |
| VTV | $10,000 | $33,163 | 12.07% |
| MUB | $10,000 | $15,333 | 4.04% |
A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
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%.
VTV’s CAGR is 8.04 percentage points higher than that of MUB and as a result, would have yielded $17,830 more on a $10,000 investment. Thus, VTV outperformed MUB by 8.04% annually.
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