UTWO vs. VTEC

Last updated Jun 4, 2026

UTWO (US Treasury 2 Year Note ETF) and VTEC (Vanguard California Tax-Exempt Bond ETF) are both exchange-traded funds - UTWO is a Government Bonds fund tracking the ICE BofA Current 2 Year US Treasury Index - Benchmark TR Gross, while VTEC is a Municipal Bonds fund tracking the S&P California AMT-Free Municipal Bond Index. Both are passively managed. Over the past year, UTWO returned 3.13% vs 6.69% for VTEC. A 0.52 correlation means they provide meaningful diversification when combined. UTWO charges 0.15%/yr vs 0.08%/yr for VTEC.

Performance

UTWO vs. VTEC - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in US Treasury 2 Year Note ETF (UTWO) and Vanguard California Tax-Exempt Bond ETF (VTEC). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, UTWO achieves a 0.33% return, which is significantly lower than VTEC's 0.98% return.

UTWO

• 1D: -0.04%
• 1M: 0.07%
• YTD: 0.33%
• 6M: 0.63%
• 1Y: 3.13%
• 3Y*: 3.78%
• 5Y*: —
• 10Y*: —

VTEC

• 1D: -0.05%
• 1M: 0.62%
• YTD: 0.98%
• 6M: 1.25%
• 1Y: 6.69%
• 3Y*: —
• 5Y*: —
• 10Y*: —

*Multi-year figures are annualized to reflect compound growth (CAGR)

UTWO vs. VTEC - Yearly Performance Comparison

	2026 (YTD)	2025	2024
UTWO US Treasury 2 Year Note ETF	0.33%	4.79%	3.62%
VTEC Vanguard California Tax-Exempt Bond ETF	0.98%	3.98%	1.42%

Correlation

The correlation between UTWO and VTEC is 0.52, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.52
Correlation (All Time) Calculated using the full available price history since Jan 31, 2024	0.52

The correlation between UTWO and VTEC has been stable across timeframes, ranging from 0.52 to 0.52 - a consistent structural relationship.

Return for Risk

UTWO vs. VTEC — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

UTWO

UTWO Risk / Return Rank: 75
UTWO Sharpe Ratio Rank: 71
UTWO Sortino Ratio Rank: 85
UTWO Omega Ratio Rank: 79
UTWO Calmar Ratio Rank: 70
UTWO Martin Ratio Rank: 70

VTEC

VTEC Risk / Return Rank: 66
VTEC Sharpe Ratio Rank: 73
VTEC Sortino Ratio Rank: 78
VTEC Omega Ratio Rank: 84
VTEC Calmar Ratio Rank: 48
VTEC Martin Ratio Rank: 47

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

UTWO vs. VTEC - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for US Treasury 2 Year Note ETF (UTWO) and Vanguard California Tax-Exempt Bond ETF (VTEC). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

	UTWO	VTEC	Difference
Sharpe ratio: Return per unit of total volatility	2.33	2.39	-0.05
Sortino ratio: Return per unit of downside risk	3.84	3.53	+0.31
Omega ratio: Gain probability vs. loss probability	1.47	1.52	-0.04
Calmar ratio: Return relative to maximum drawdown	3.50	2.35	+1.15
Martin ratio: Return relative to average drawdown	12.89	7.83	+5.05
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

UTWO vs. VTEC - Sharpe Ratio Comparison

The current UTWO Sharpe Ratio is 2.33, which is comparable to the VTEC Sharpe Ratio of 2.39. The chart below compares the historical Sharpe Ratios of UTWO and VTEC, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	UTWO	VTEC	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	2.33	2.39	-0.05
Sharpe Ratio (All Time) Calculated using the full available price history	1.45	0.73	+0.72

Drawdowns

UTWO vs. VTEC - Drawdown Comparison

The maximum UTWO drawdown since its inception was -2.04%, smaller than the maximum VTEC drawdown of -4.50%. Use the drawdown chart below to compare losses from any high point for UTWO and VTEC.

Drawdown Indicators

	UTWO	VTEC	Difference
Max Drawdown Largest peak-to-trough decline	-2.04%	-4.50%	+2.46%
Max Drawdown (1Y) Largest decline over 1 year	-0.90%	-2.85%	+1.95%
Max Drawdown (3Y) Largest decline over 3 years	-1.08%	—	—
Current Drawdown Current decline from peak	-0.38%	-0.82%	+0.44%
Average Drawdown Average peak-to-trough decline	-0.49%	-1.12%	+0.63%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.24%	0.86%	-0.62%

Volatility

UTWO vs. VTEC - Volatility Comparison

The current volatility for US Treasury 2 Year Note ETF (UTWO) is 0.36%, while Vanguard California Tax-Exempt Bond ETF (VTEC) has a volatility of 0.86%. This indicates that UTWO experiences smaller price fluctuations and is considered to be less risky than VTEC based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	UTWO	VTEC	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.36%	0.86%	-0.50%
Volatility (6M) Calculated over the trailing 6-month period	0.92%	1.87%	-0.95%
Volatility (1Y) Calculated over the trailing 1-year period	1.35%	2.82%	-1.47%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	2.07%	3.76%	-1.69%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	2.07%	3.76%	-1.69%

UTWO vs. VTEC - Expense Ratio Comparison

UTWO has a 0.15% expense ratio, which is higher than VTEC's 0.08% expense ratio. However, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.

Dividends

UTWO vs. VTEC - Dividend Comparison

UTWO's dividend yield for the trailing twelve months is around 3.50%, more than VTEC's 3.16% yield.

Position	TTM	2025	2024	2023	2022
UTWO US Treasury 2 Year Note ETF	3.50%	3.63%	4.22%	4.39%	1.22%
VTEC Vanguard California Tax-Exempt Bond ETF	3.16%	3.13%	2.54%	0.00%	0.00%

Frequently Asked Questions

Can I hold both UTWO and VTEC in my portfolio?

UTWO and VTEC have a correlation of 0.52, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, UTWO or VTEC?

VTEC has higher volatility (0.86%) compared to UTWO (0.36%). In terms of maximum drawdown, UTWO dropped -2.04% vs VTEC's -4.50%.

Which ETF is better, UTWO or VTEC?

On 1-year performance, VTEC leads with 6.69% vs 3.13% for UTWO. On fees, VTEC is cheaper at 0.08% per year. On volatility, UTWO has been the lower-risk option at 0.36%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, UTWO or VTEC?

Over the 1-year period, VTEC has performed better with a 6.69% return vs 3.13%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, UTWO or VTEC?

VTEC is cheaper with a 0.08% expense ratio, compared with 0.15% for UTWO.

Which ETF pays a higher dividend yield, UTWO or VTEC?

UTWO has the higher dividend yield at 3.50%, compared with 3.16% for VTEC.

What is the main difference between UTWO and VTEC?

UTWO is categorized as Government Bonds, while VTEC is Municipal Bonds. UTWO tracks ICE BofA Current 2 Year US Treasury Index - Benchmark TR Gross, while VTEC tracks S&P California AMT-Free Municipal Bond Index. They also come from different issuers: US Benchmark Series and Vanguard. Their fees differ too: 0.15% for UTWO and 0.08% for VTEC.

Which has better risk-adjusted returns?

VTEC currently has the higher Sharpe Ratio (2.39 vs 2.33), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.