VMBS vs. BND
VMBS (Vanguard Mortgage-Backed Securities ETF) and BND (Vanguard Total Bond Market ETF) are both exchange-traded funds - VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS Index, while BND is a Total Bond Market fund tracking the Bloomberg U.S. Aggregate Float Adjusted Index. Both are passively managed. Over the past 10 years, VMBS returned 1.35%/yr vs 1.56%/yr for BND. A 0.80 correlation means they provide meaningful diversification when combined. VMBS charges 0.04%/yr vs 0.03%/yr for BND.
Performance
VMBS vs. BND - Performance Comparison
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Returns By Period
In the year-to-date period, VMBS achieves a 0.92% return, which is significantly higher than BND's 0.49% return. Over the past 10 years, VMBS has underperformed BND with an annualized return of 1.35%, while BND has yielded a comparatively higher 1.56% annualized return.
VMBS
- 1D
- 0.09%
- 1M
- 0.63%
- YTD
- 0.92%
- 6M
- 1.02%
- 1Y
- 6.00%
- 3Y*
- 4.52%
- 5Y*
- 0.57%
- 10Y*
- 1.35%
BND
- 1D
- 0.11%
- 1M
- 0.64%
- YTD
- 0.49%
- 6M
- 0.57%
- 1Y
- 4.23%
- 3Y*
- 3.96%
- 5Y*
- 0.05%
- 10Y*
- 1.56%
VMBS vs. BND - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 0.92% | 8.36% | 1.70% | 5.34% | -11.90% | -1.28% | 3.76% | 6.19% | 0.91% | 2.47% |
BND Vanguard Total Bond Market ETF | 0.49% | 7.08% | 1.38% | 5.65% | -13.11% | -1.86% | 7.71% | 8.84% | -0.12% | 3.57% |
Correlation
The correlation between VMBS and BND is 0.95 - these two move nearly in lockstep. At this level, holding both provides almost no diversification benefit. If you already own one, adding the other does little to reduce portfolio risk.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.95 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.97 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.95 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.87 |
Correlation (All Time) Calculated using the full available price history since Nov 23, 2009 | 0.80 |
The correlation between VMBS and BND shifts across timeframes, from 0.80 (all time) to 0.97 (3 years), reflecting how their relationship changes across market environments.
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Return for Risk
VMBS vs. BND — Risk / Return Rank
VMBS
BND
VMBS vs. BND - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Mortgage-Backed Securities ETF (VMBS) and Vanguard Total Bond Market ETF (BND). 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.
Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.
| VMBS | BND | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | +0.26 | ||
| Sortino ratioReturn per unit of downside risk | +0.38 | ||
| Omega ratioGain probability vs. loss probability | 1.25 | 1.20 | +0.05 |
| Calmar ratioReturn relative to maximum drawdown | 2.24 | 1.59 | +0.66 |
| Martin ratioReturn relative to average drawdown | 7.12 | 4.52 | +2.60 |
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Drawdowns
VMBS vs. BND - Drawdown Comparison
The maximum VMBS drawdown since its inception was -17.47%, smaller than the maximum BND drawdown of -18.58%. Use the drawdown chart below to compare losses from any high point for VMBS and BND.
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Drawdown Indicators
| VMBS | BND | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.47% | -18.58% | +1.11% |
Max Drawdown (1Y)Largest decline over 1 year | -2.68% | -2.68% | 0.00% |
Max Drawdown (3Y)Largest decline over 3 years | -7.65% | -5.92% | -1.73% |
Max Drawdown (5Y)Largest decline over 5 years | -17.12% | -17.91% | +0.79% |
Max Drawdown (10Y)Largest decline over 10 years | -17.47% | -18.58% | +1.11% |
Current DrawdownCurrent decline from peak | -1.07% | -2.15% | +1.08% |
Average DrawdownAverage peak-to-trough decline | -2.49% | -3.06% | +0.57% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.84% | 0.94% | -0.10% |
Volatility
VMBS vs. BND - Volatility Comparison
Vanguard Mortgage-Backed Securities ETF (VMBS) has a higher volatility of 1.19% compared to Vanguard Total Bond Market ETF (BND) at 1.08%. This indicates that VMBS's price experiences larger fluctuations and is considered to be riskier than BND based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| VMBS | BND | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.19% | 1.08% | +0.11% |
Volatility (6M)Calculated over the trailing 6-month period | 3.27% | 2.77% | +0.50% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.30% | 3.74% | +0.56% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.78% | 6.03% | +0.75% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.41% | 5.53% | -0.12% |
VMBS vs. BND - Expense Ratio Comparison
VMBS has a 0.04% expense ratio, which is higher than BND's 0.03% 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
VMBS vs. BND - Dividend Comparison
VMBS's dividend yield for the trailing twelve months is around 4.17%, more than BND's 3.96% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
BND Vanguard Total Bond Market ETF | 3.96% | 3.86% | 3.67% | 3.09% | 2.60% | 2.12% | 2.38% | 2.72% | 2.81% | 2.54% | 2.51% | 2.57% |
VMBS Vanguard Mortgage-Backed Securities ETF | 4.17% | 4.20% | 3.94% | 3.31% | 2.35% | 1.02% | 2.01% | 2.77% | 2.72% | 2.16% | 2.10% | 2.12% |
Frequently Asked Questions
With a correlation of 0.95, VMBS and BND move almost identically. Holding both adds very little diversification - you're essentially doubling your position in the same market segment. Choosing one is usually more capital-efficient.
VMBS has higher volatility (1.19%) compared to BND (1.08%). In terms of maximum drawdown, VMBS dropped -17.47% vs BND's -18.58%.
On 10-year performance, BND leads with 1.56% vs 1.35% for VMBS. On fees, BND is cheaper at 0.03% per year. On volatility, BND has been the lower-risk option at 1.08%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, BND has performed better with a 1.56% return vs 1.35%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
BND is cheaper with a 0.03% expense ratio, compared with 0.04% for VMBS.
VMBS has the higher dividend yield at 4.17%, compared with 3.96% for BND.
VMBS is categorized as Mortgage Backed Securities, while BND is Total Bond Market. VMBS tracks Barclays Capital U.S. MBS Index, while BND tracks Bloomberg U.S. Aggregate Float Adjusted Index. Their fees differ too: 0.04% for VMBS and 0.03% for BND.
VMBS currently has the higher Sharpe Ratio (1.40 vs 1.14), 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.
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