VTEB vs VWO
Vanguard Tax-Exempt Bond ETF vs Vanguard FTSE Emerging Markets ETF
Quick Verdict
VTEB has a lower expense ratio. VWO delivered stronger 1-year returns. VWO offers more diversification with 3982 holdings.
Side-by-Side Comparison
| Metric | VTEB | VWO | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.06% | |
| AUM | $46.0B | $122.3B | |
| Dividend Yield | 3.34% | 2.37% | |
| Holdings | 9,952 | 6,334 | |
| YTD Return | +0.59% | +10.11% | |
| 1Y Return | +4.98% | +21.05% | |
| 3Y Return (annualized) | +3.13% | +17.66% | |
| 5Y Return (annualized) | +0.63% | +6.52% | |
| Volatility (annualized) | 4.9% | 20.1% | |
| Max Drawdown | -17.0% | -68.3% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Tax Preferred | Equity | |
| Inception | Aug 21, 2015 | Mar 4, 2005 |
VTEB vs VWO Performance
Vanguard Tax-Exempt Bond ETF (VTEB) is a ETF from Vanguard (US) and Vanguard FTSE Emerging Markets ETF (VWO) is a ETF from Vanguard (US). Over the past year VTEB returned +4.98% while VWO returned +21.05%. Year to date, VTEB is up 0.59% versus a gain of 10.11% for VWO.
Over three years, VTEB compounded at +3.13% per year against +17.66% for VWO; over five years the annualized figures are +0.63% and +6.52% respectively. Across the full 11-year window we track, VWO has the edge at +4.98% annualized vs +1.27%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VWO has been the more volatile fund, with annualized monthly volatility of 20.1% 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 -17.0% for VTEB and -68.3% for VWO. 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 0.49. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VTEB charges 0.03% per year while VWO charges 0.06%. On a $10,000 position that is $3 vs $6 annually, a gap of $3 per year that compounds over a long holding period. On income, VTEB currently yields 3.34% against 2.37% for VWO.
Holdings Overlap
VTEB and VWO share 0 holdings out of 7515 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, VTEB or VWO?
VTEB has an expense ratio of 0.03% while VWO charges 0.06%. VTEB is the cheaper option. On a $10,000 investment, that is $3 per year of difference.
Which performed better, VTEB or VWO?
Over the past year VTEB returned +4.98% vs +21.05% for VWO, so VWO leads on 1-year performance. Over the longest common window we track (11 years), VTEB annualized +1.27% vs +4.98% for VWO. Past performance does not guarantee future results.
Which is riskier, VTEB or VWO?
VWO has been the more volatile fund at 20.1% annualized versus 4.9% for VTEB. Worst drawdown: VTEB -17.0% vs VWO -68.3%.
Should I hold both VTEB and VWO?
VTEB and VWO have a monthly-return correlation of 0.49, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VTEB and VWO?
VTEB and VWO share 0 common holdings with a 0.0% weight overlap. Combined, they hold 7515 unique securities.
Which pays a higher dividend, VTEB or VWO?
VTEB yields 3.34% while VWO yields 2.37%, so VTEB currently pays the higher dividend yield.
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