The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VUG and MUB? And which fund is better?
The expense ratio of VUG is 0.03 percentage points lower than MUB’s (0.04% vs. 0.07%). VUG also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, VUG has provided higher returns than MUB over the past ten years.
In this article, we’ll compare VUG vs. MUB. We’ll look at fund composition and performance, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VUG’s and MUB’s risk metrics, industry exposure, and holdings and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares National Muni Bond ETF|
|Category||Large Growth||Muni National Interm|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% 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%.
VUG’s dividend yield is 1.39% lower than that of MUB (0.57% vs. 1.96%). Also, VUG yielded on average 13.54% more per year over the past decade (17.58% vs. 4.04%). The expense ratio of VUG is 0.03 percentage points lower than MUB’s (0.04% vs. 0.07%).
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|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|MUB Bond Sectors||Weight|
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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The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Beta of 1.04 and a Mean Return of 1.44. Its Treynor Ratio is 16.13 while VUG’s Sharpe Ratio is 1.13. Furthermore, the fund has a R-squared of 92.48 and a Standard Deviation of 14.76.
The iShares National Muni Bond ETF (MUB) has a Beta of 1.01 with a Treynor Ratio of 3.2 and a Mean Return of 0.32. Its Standard Deviation is 3.68 while MUB’s Alpha is -0.46. Furthermore, the fund has a R-squared of 99 and a Sharpe Ratio of 0.88.
VUG’s Mean Return is 1.12 points higher than that of MUB and its R-squared is 6.52 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than MUB. The Alpha and Beta of VUG are 2.27 points higher and 0.03 points higher than MUB’s Alpha and Beta.
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VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
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%.
VUG’s CAGR is 13.54 percentage points higher than that of MUB and as a result, would have yielded $39,402 more on a $10,000 investment. Thus, VUG outperformed MUB by 13.54% annually.
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