VNQ vs VTEB
Vanguard Real Estate ETF vs Vanguard Tax-Exempt Bond ETF
Quick Verdict
VTEB has a lower expense ratio. VNQ delivered stronger 1-year returns. VTEB offers more diversification with 3533 holdings.
Side-by-Side Comparison
| Metric | VNQ | VTEB | Winner |
|---|---|---|---|
| Expense Ratio | 0.13% | 0.03% | |
| AUM | $38.2B | $46.0B | |
| Dividend Yield | 3.52% | 3.34% | |
| Holdings | 144 | 9,952 | |
| YTD Return | +12.08% | +0.59% | |
| 1Y Return | +13.61% | +4.98% | |
| 3Y Return (annualized) | +9.82% | +3.13% | |
| 5Y Return (annualized) | +2.12% | +0.63% | |
| Volatility (annualized) | 21.4% | 4.9% | |
| Max Drawdown | -75.8% | -17.0% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Equity | Tax Preferred | |
| Inception | Sep 23, 2004 | Aug 21, 2015 |
VNQ vs VTEB Performance
Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US) and Vanguard Tax-Exempt Bond ETF (VTEB) is a ETF from Vanguard (US). Over the past year VNQ returned +13.61% while VTEB returned +4.98%. Year to date, VNQ is up 12.08% versus a gain of 0.59% for VTEB.
Over three years, VNQ compounded at +9.82% per year against +3.13% for VTEB; over five years the annualized figures are +2.12% and +0.63% respectively. Across the full 11-year window we track, VNQ has the edge at +4.08% annualized vs +1.27%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VNQ has been the more volatile fund, with annualized monthly volatility of 21.4% compared with 4.9% for VTEB. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -75.8% for VNQ and -17.0% for VTEB. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.56. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VNQ charges 0.13% per year while VTEB charges 0.03%. On a $10,000 position that is $13 vs $3 annually, a gap of $10 per year that compounds over a long holding period. On income, VNQ currently yields 3.52% against 3.34% for VTEB.
Holdings Overlap
VNQ and VTEB share 0 holdings out of 3677 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VNQ or VTEB?
VNQ has an expense ratio of 0.13% while VTEB charges 0.03%. VTEB is the cheaper option. On a $10,000 investment, that is $10 per year of difference.
Which performed better, VNQ or VTEB?
Over the past year VNQ returned +13.61% vs +4.98% for VTEB, so VNQ leads on 1-year performance. Over the longest common window we track (11 years), VNQ annualized +4.08% vs +1.27% for VTEB. Past performance does not guarantee future results.
Which is riskier, VNQ or VTEB?
VNQ has been the more volatile fund at 21.4% annualized versus 4.9% for VTEB. Worst drawdown: VNQ -75.8% vs VTEB -17.0%.
Should I hold both VNQ and VTEB?
VNQ and VTEB have a monthly-return correlation of 0.56, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VNQ and VTEB?
VNQ and VTEB share 0 common holdings with a 0.0% weight overlap. Combined, they hold 3677 unique securities.
Which pays a higher dividend, VNQ or VTEB?
VNQ yields 3.52% while VTEB yields 3.34%, so VNQ currently pays the higher dividend yield.
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