The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between VXUS and MBB? And which fund is better?
The expense ratio of VXUS is 0.02 percentage points higher than MBB’s (0.08% vs. 0.06%). VXUS also has a high exposure to the financial services sector while MBB is mostly comprised of AAA bonds. Overall, VXUS has provided higher returns than MBB over the past ten years.
In this article, we’ll compare VXUS vs. MBB. We’ll look at industry exposure and risk metrics, as well as at their annual returns and performance. Moreover, I’ll also discuss VXUS’s and MBB’s holdings, portfolio growth, and fund composition and examine how these affect their overall returns.
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Summary
| VXUS | MBB | |
| Name | Vanguard Total International Stock Index Fund ETF Shares | iShares MBS ETF |
| Category | Foreign Large Blend | Intermediate Government |
| Issuer | Vanguard | iShares |
| AUM | 404.73B | 25.69B |
| Avg. Return | 8.41% | 3.08% |
| Div. Yield | 2.44% | 1.88% |
| Expense Ratio | 0.08% | 0.06% |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
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%.
VXUS’s dividend yield is 0.56% higher than that of MBB (2.44% vs. 1.88%). Also, VXUS yielded on average 5.33% more per year over the past decade (8.41% vs. 3.08%). The expense ratio of VXUS is 0.02 percentage points higher than MBB’s (0.08% vs. 0.06%).
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Fund Composition
Holdings
| VXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.62% |
| Tencent Holdings Ltd | 1.41% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.26% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.05% |
| ASML Holding NV | 0.86% |
| Roche Holding AG | 0.81% |
| Toyota Motor Corp | 0.67% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.61% |
| Novartis AG | 0.6% |
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
| 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.
Risk Analysis
| VXUS | MBB | |
| Mean Return | 0.56 | 0.2 |
| R-squared | 98.39 | 74.38 |
| Std. Deviation | 15.12 | 2.12 |
| Alpha | 0.31 | 0.14 |
| Beta | 0.99 | 0.6 |
| Sharpe Ratio | 0.4 | 0.87 |
| Treynor Ratio | 5.14 | 3.02 |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Sharpe Ratio of 0.4 with a Treynor Ratio of 5.14 and a Alpha of 0.31. Its Beta is 0.99 while VXUS’s Mean Return is 0.56. Furthermore, the fund has a Standard Deviation of 15.12 and a R-squared of 98.39.
The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a R-squared of 74.38 and a Standard Deviation of 2.12. Its Mean Return is 0.2 while MBB’s Beta is 0.6. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Alpha of 0.14.
VXUS’s Mean Return is 0.36 points higher than that of MBB and its R-squared is 24.01 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than MBB. The Alpha and Beta of VXUS are 0.17 points higher and 0.39 points higher than MBB’s Alpha and Beta.
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Performance
Annual Returns
| Year | VXUS | MBB |
| 2020 | 11.32% | 4.03% |
| 2019 | 21.58% | 6.27% |
| 2018 | -14.42% | 0.81% |
| 2017 | 27.52% | 2.37% |
| 2016 | 4.72% | 1.28% |
| 2015 | -4.28% | 1.28% |
| 2014 | -4.17% | 6.16% |
| 2013 | 15.16% | -1.92% |
| 2012 | 18.22% | 2.23% |
| 2011 | 0.0% | 5.88% |
| 2010 | 0.0% | 5.44% |
VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% 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 |
| VXUS | $10,000 | $19,315 | 8.41% |
| MBB | $10,000 | $12,456 | 3.08% |
A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in MBB, the end total would have been $12,456. This equates to a $2,456 profit over 9 years and a compound annual growth rate (CAGR) of 3.08%.
VXUS’s CAGR is 5.33 percentage points higher than that of MBB and as a result, would have yielded $6,859 more on a $10,000 investment. Thus, VXUS outperformed MBB by 5.33% annually.
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