VTBNX vs VTIP
Vanguard Total Bond Market II Index Fund Institutional Shares vs Vanguard Short-Term Inflation-Protected Securities ETF
Quick Verdict
VTBNX has a lower expense ratio. VTIP delivered stronger 1-year returns. VTBNX offers more diversification with 8098 holdings.
Side-by-Side Comparison
| Metric | VTBNX | VTIP | Winner |
|---|---|---|---|
| Expense Ratio | 0.02% | 0.03% | |
| AUM | $206.7B | $19.3B | |
| Dividend Yield | 3.73% | 3.60% | |
| Holdings | 15,623 | 27 | |
| YTD Return | -2.29% | +1.89% | |
| 1Y Return | -1.67% | +2.97% | |
| 3Y Return (annualized) | +0.18% | +5.46% | |
| 5Y Return (annualized) | -3.43% | +3.38% | |
| Volatility (annualized) | 6.3% | 2.4% | |
| Max Drawdown | -21.5% | -7.1% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Fixed Income | Fixed Income | |
| Inception | Feb 17, 2009 | Oct 12, 2012 |
VTBNX vs VTIP Performance
Vanguard Total Bond Market II Index Fund Institutional Shares (VTBNX) is a mutual fund from Vanguard (US) and Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) is a ETF from Vanguard (US). Over the past year VTBNX returned -1.67% while VTIP returned +2.97%. Year to date, VTBNX is down 2.29% versus a gain of 1.89% for VTIP.
Over three years, VTBNX compounded at +0.18% per year against +5.46% for VTIP; over five years the annualized figures are -3.43% and +3.38% respectively. Across the full 5-year window we track, VTIP has the edge at +1.58% annualized vs -3.43%. 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 2.4% for VTIP. 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 -7.1% for VTIP. 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 0.71. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
VTBNX charges 0.02% per year while VTIP 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 3.60% for VTIP.
Holdings Overlap
VTBNX and VTIP share 0 holdings out of 8121 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 VTIP?
VTBNX has an expense ratio of 0.02% while VTIP 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 VTIP?
Over the past year VTBNX returned -1.67% vs +2.97% for VTIP, so VTIP leads on 1-year performance. Over the longest common window we track (5 years), VTBNX annualized -3.43% vs +1.58% for VTIP. Past performance does not guarantee future results.
Which is riskier, VTBNX or VTIP?
VTBNX has been the more volatile fund at 6.3% annualized versus 2.4% for VTIP. Worst drawdown: VTBNX -21.5% vs VTIP -7.1%.
Should I hold both VTBNX and VTIP?
VTBNX and VTIP have a monthly-return correlation of 0.71, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VTBNX and VTIP?
VTBNX and VTIP share 0 common holdings with a 0.0% weight overlap. Combined, they hold 8121 unique securities.
Which pays a higher dividend, VTBNX or VTIP?
VTBNX yields 3.73% while VTIP yields 3.60%, so VTBNX currently pays the higher dividend yield.
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