Broad Bond Exposure or Tax-Exempt Muni Income? BND vs. MUB

Vanguard Total Bond Market ETF (NASDAQ:BND) offers wide vulnerability to taxable investment-grade bonds astatine a little cost, portion iShares National Muni Bond ETF (NYSEMKT:MUB) focuses connected tax-exempt income with historically little volatility.

Fixed-income investors often take betwixt taxable and tax-exempt strategies to negociate hazard and income. This examination evaluates however BND, a monolithic aggregate enslaved fund, matches up against MUB, a starring municipal enslaved fund, regarding costs, returns, and portfolio composition.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

The Vanguard money is the much affordable enactment with its 0.03% disbursal ratio. While its 4.00% dividend output is higher than the 3.20% offered by the iShares fund, investors whitethorn privation to see the tax-exempt presumption of municipal enslaved payouts.

Performance & hazard examination

What's wrong

Vanguard Total Bond Market ETF (NASDAQ:BND) provides extended vulnerability to the U.S. domestic, taxable, investment-grade fixed-income market. Its portfolio is highly diversified crossed 346 holdings, wherever nary azygous presumption exceeds 0.48% of the full assets nether absorption (AUM). It serves arsenic a wide instrumentality for portfolio diversification, chiefly holding authorities and firm bonds portion excluding inflation-protected oregon tax-exempt securities.

iShares National Muni Bond ETF (NYSEMKT:MUB) is designed to replicate the show of high-quality municipal bonds issued crossed the United States. Also launched successful 2007, the iShares money has a trailing-12-month dividend of $3.40 per share. Unlike BND, it focuses connected tax-exempt income, which often appeals to investors successful higher taxation brackets.

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What this means for investors

For enslaved investors, a higher stated output does not ever construe into much after-tax income. This is simply a cardinal information erstwhile comparing the Vanguard Total Bond Market ETF, which provides wide taxable enslaved exposure, with the iShares National Muni Bond ETF, which offers federally tax-exempt municipal income.