The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the Vanguard Total International Bond Index Fund ETF Shares (BNDX) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and BNDX is a Vanguard N/A fund. So, what’s the difference between VWO and BNDX? And which fund is better?
The expense ratio of VWO is 0.02 percentage points higher than BNDX’s (0.1% vs. 0.08%). VWO also has a high exposure to the financial services sector while BNDX is mostly comprised of A bonds. Overall, VWO has provided higher returns than BNDX over the past ten years.
In this article, we’ll compare VWO vs. BNDX. We’ll look at holdings and fund composition, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VWO’s and BNDX’s annual returns, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard FTSE Emerging Markets Index Fund ETF Shares||Vanguard Total International Bond Index Fund ETF Shares|
|Category||Diversified Emerging Mkts||N/A|
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% with an expense ratio of 0.1%.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.
VWO’s dividend yield is 1.04% higher than that of BNDX (1.98% vs. 0.94%). Also, VWO yielded on average 1.16% more per year over the past decade (5.79% vs. 4.63%). The expense ratio of VWO is 0.02 percentage points higher than BNDX’s (0.1% vs. 0.08%).
|Tencent Holdings Ltd||5.29%|
|Alibaba Group Holding Ltd Ordinary Shares||4.73%|
|Taiwan Semiconductor Manufacturing Co Ltd||4.58%|
|Taiwan Semiconductor Manufacturing Co Ltd ADR||1.7%|
|Reliance Industries Ltd Shs Dematerialised||1.06%|
|Naspers Ltd Class N||1.01%|
|China Construction Bank Corp Class H||0.84%|
VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.
Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.
|BNDX Bond Sectors||Weight|
BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Standard Deviation of 17.64 with a R-squared of 81.69 and a Sharpe Ratio of 0.27. Its Beta is 1.06 while VWO’s Alpha is -1.36. Furthermore, the fund has a Treynor Ratio of 3.14 and a Mean Return of 0.45.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Beta of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while BNDX’s Mean Return is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
VWO’s Mean Return is 0.45 points higher than that of BNDX and its R-squared is 81.69 points higher. With a Standard Deviation of 17.64, VWO is slightly more volatile than BNDX. The Alpha and Beta of VWO are 1.36 points lower and 1.06 points higher than BNDX’s Alpha and Beta.
VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% respectively.
The year 2014 was the strongest year for BNDX, returning 8.83% on an annual basis. The poorest year for BNDX in the last ten years was 2013, with a yield of 0.0%. Most years the Vanguard Total International Bond Index Fund ETF Shares has given investors modest returns, such as in 2015, 2017, and 2018, when gains were 1.08%, 2.4%, and 2.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VWO would have resulted in a final balance of $14,830. This is a profit of $4,830 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
With a $10,000 investment in BNDX, the end total would have been $13,695. This equates to a $3,695 profit over 7 years and a compound annual growth rate (CAGR) of 4.63%.
VWO’s CAGR is 1.16 percentage points higher than that of BNDX and as a result, would have yielded $1,135 more on a $10,000 investment. Thus, VWO outperformed BNDX by 1.16% annually.
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