BND Offers Broader Bond Mix Than VGIT

Worried about market volatility? Bonds can act like shock absorbers in your investment portfolio, but which bond ETF (exchange-traded fund) is right for you?

BND vs. VGIT: A Detailed Comparison

Cost and Size

Both BND and VGIT have an expense ratio of 0.03%, making them incredibly cost-effective. BND is significantly larger, with assets under management (AUM) of $384.8 billion, while VGIT holds $44.6 billion.

Performance and Risk

Over the past five years, a $1,000 investment in VGIT would have grown to $998, compared to $994 for BND. VGIT has exhibited slightly lower volatility, with a lower maximum drawdown (the peak-to-trough decline during a specified period) of -14.77%, versus -17.29% for BND.

Portfolio Composition

BND holds a diversified portfolio of 11,444 bonds, including Treasury bonds (49.2%), government mortgage-backed securities (19.5%), and industrial bonds (14.5%). VGIT, in contrast, invests almost entirely in intermediate-term U.S. Treasuries. BND has an average effective maturity of eight years.

Duration and Yield

BND's positions have an average duration (a measure of a bond fund's sensitivity to interest rate changes) of 5.7 years, compared to 4.9 years for VGIT. The current yield for BND is 4.2%, slightly higher than VGIT’s 3.9%.

Volatility (Beta)

VGIT has a lower beta (0.82) compared to BND (0.98). Beta measures price volatility relative to the S\&P 500 (a stock market index of 500 of the largest companies publicly traded in the United States). A lower beta suggests less volatility relative to the index.