VTBNX vs VTEB
Vanguard Total Bond Market II Index Fund Institutional Shares vs Vanguard Tax-Exempt Bond ETF
Quick Verdict
VTBNX has a lower expense ratio. VTEB delivered stronger 1-year returns. VTBNX offers more diversification with 8098 holdings.
Side-by-Side Comparison
| Metric | VTBNX | VTEB | Winner |
|---|---|---|---|
| Expense Ratio | 0.02% | 0.03% | |
| AUM | $206.7B | $46.0B | |
| Dividend Yield | 3.73% | 3.34% | |
| Holdings | 15,623 | 9,952 | |
| YTD Return | -2.60% | +0.59% | |
| 1Y Return | -1.88% | +4.98% | |
| 3Y Return (annualized) | +0.40% | +3.13% | |
| 5Y Return (annualized) | -3.56% | +0.63% | |
| Volatility (annualized) | 6.3% | 4.9% | |
| Max Drawdown | -21.5% | -17.0% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Fixed Income | Tax Preferred | |
| Inception | Feb 17, 2009 | Aug 21, 2015 |
VTBNX vs VTEB Performance
Vanguard Total Bond Market II Index Fund Institutional Shares (VTBNX) is a mutual fund from Vanguard (US) and Vanguard Tax-Exempt Bond ETF (VTEB) is a ETF from Vanguard (US). Over the past year VTBNX returned -1.88% while VTEB returned +4.98%. Year to date, VTBNX is down 2.60% versus a gain of 0.59% for VTEB.
Over three years, VTBNX compounded at +0.40% per year against +3.13% for VTEB; over five years the annualized figures are -3.56% and +0.63% respectively. Across the full 5-year window we track, VTEB has the edge at +1.27% annualized vs -3.56%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VTBNX has been the more volatile fund, with annualized monthly volatility of 6.3% 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 -21.5% for VTBNX 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 0.91. They move almost in lockstep, so holding both mostly duplicates the same exposure.
Fees and Cost Over Time
VTBNX charges 0.02% per year while VTEB charges 0.03%. On a $10,000 position that is $2 vs $3 annually, a gap of $1 per year that compounds over a long holding period. On income, VTBNX currently yields 3.73% against 3.34% for VTEB.
Holdings Overlap
VTBNX and VTEB share 0 holdings out of 11631 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, VTBNX or VTEB?
VTBNX has an expense ratio of 0.02% while VTEB charges 0.03%. VTBNX is the cheaper option. On a $10,000 investment, that is $1 per year of difference.
Which performed better, VTBNX or VTEB?
Over the past year VTBNX returned -1.88% vs +4.98% for VTEB, so VTEB leads on 1-year performance. Over the longest common window we track (5 years), VTBNX annualized -3.56% vs +1.27% for VTEB. Past performance does not guarantee future results.
Which is riskier, VTBNX or VTEB?
VTBNX has been the more volatile fund at 6.3% annualized versus 4.9% for VTEB. Worst drawdown: VTBNX -21.5% vs VTEB -17.0%.
Should I hold both VTBNX and VTEB?
VTBNX and VTEB have a monthly-return correlation of 0.91, so they move almost identically. Holding both adds little diversification - most investors pick one, usually on fees or the specific index tracked.
What is the holdings overlap between VTBNX and VTEB?
VTBNX and VTEB share 0 common holdings with a 0.0% weight overlap. Combined, they hold 11631 unique securities.
Which pays a higher dividend, VTBNX or VTEB?
VTBNX yields 3.73% while VTEB yields 3.34%, so VTBNX currently pays the higher dividend yield.
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