VTBNX vs VTEB
Vanguard Total Bond Market II Index Fund Institutional Shares vs Vanguard Tax-Exempt Bond ETF
Which is better, VTBNX or VTEB?
Long Term High Quality against Municipal Bond.
VTBNX has a lower expense ratio. The two have moved almost in lockstep, correlation 0.91.
MarketXLS is not an investment adviser. This comparison is generated automatically from market data and is for information only. A Best mark means the better reading on that one measure, not a recommendation to buy.
Side-by-Side Comparison
| Metric | VTBNX | VTEB |
|---|---|---|
| Expense Ratio | 0.02%Best | 0.03% |
| AUM | $207.3B | $48.5B |
| Dividend Yield | 3.80% | 3.44% |
| Holdings | 14,920 | 10,566 |
| YTD Price Return | -3.85% | -4.31% |
| 1Y Price Return | -4.05% | -3.85% |
| 3Y Price Return (annualized) | +0.33% | -0.12% |
| 5Y Price Return (annualized) | -3.74% | -2.66% |
| Volatility (annualized) | 6.3% | 6.2%Best |
| Max Drawdown | -20.9% | -14.0%Best |
| Fund Family | Vanguard (US) | Vanguard (US) |
| Category | Fixed Income | Tax Preferred |
| Style | Long Term High Quality | Municipal Bond |
| Inception | Feb 17, 2009 | Aug 21, 2015 |
Not shown on this pair: $10,000 over 5 years, Top 10 Weight.
A price return is not the return of a fund that pays its income out. The coupon or distribution never appears in the price, so the return rows carry no winner here. VTBNX currently yields 3.80% and VTEB 3.44%.
Volatility and max drawdown are measured over the window both funds cover: Sep 23, 2021 to Sep 21, 2026 (5 years).
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 an ETF from Vanguard (US). Over the past year VTBNX's price moved -4.05% and VTEB's -3.85%, before the income each one paid out.
Over three years, VTBNX compounded at +0.33% per year against -0.12% for VTEB; over five years the annualized figures are -3.74% and -2.66% respectively.
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 6.2% 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 -20.9% for VTBNX and -14.0% for VTEB. Drawdown depth is what each fund did in the worst stretch of the window measured above.
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 3.80% against 3.44% for VTEB.
Structure and taxes
VTBNX is a mutual fund and VTEB is an ETF. A mutual fund prices once a day at net asset value and may carry a purchase minimum. An ETF trades through the day at whatever the market pays for it.
In a taxable account the difference that usually matters is distributions. An ETF can meet redemptions in kind, so it rarely has to sell holdings and rarely passes a capital gain to the people who held it; a mutual fund that sells holdings to meet redemptions can distribute a realised gain at year end to everyone still in the fund, whether or not they sold anything themselves. In a tax-deferred account that difference largely disappears. Both are descriptions of how the two wrappers work, not a recommendation.
Tax-loss harvesting works on either wrapper.
Holdings Overlap
We hold position weights for 12,623 holdings in VTBNX and 17 in VTEB, totalling 61.9% and 0.0% of the two funds. The two books name no position in common, so there is no overlap percentage to show.
0 positions in common, counted across the 12,623 positions we hold weights for in VTBNX and 17 in VTEB, against full books of 14,920 and 10,566.
You are not choosing between two funds in isolation.
Whichever of VTBNX and VTEB you pick has to sit alongside everything else you own. Add the rest and see what the combination actually holds.
Free for up to 10 holdings. No account needed.
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, by $1 a year on a $10,000 investment.
Which is riskier, VTBNX or VTEB?
VTBNX has been the more volatile fund at 6.3% annualized versus 6.2% for VTEB. Worst drawdown: VTBNX -20.9% vs VTEB -14.0%.
Should I hold both VTBNX and VTEB?
VTBNX and VTEB have a monthly-return correlation of 0.91, so they move almost identically. What is left to separate them is the fee and the index each one tracks. This is information, not a recommendation.
Which pays a higher dividend, VTBNX or VTEB?
VTBNX yields 3.80% while VTEB yields 3.44%, so VTBNX currently pays the higher dividend yield.
Is it better to hold VTBNX or VTEB in a taxable account?
VTEB is an ETF and VTBNX is a mutual fund. An ETF can meet redemptions in kind, so it rarely distributes a capital gain to the people holding it. A mutual fund that sells holdings to meet redemptions can pass a realised gain to every holder at year end. In a tax-deferred account that difference largely disappears. This is information, not a recommendation.
Is VTEB better than VTBNX?
VTBNX has a lower expense ratio. The two have moved almost in lockstep, correlation 0.91. Which one suits a particular account depends on what it is for. This is information, not a recommendation.