VMBS vs. VTIP
VMBS (Vanguard Mortgage-Backed Securities ETF) and VTIP (Vanguard Short-Term Inflation-Protected Securities ETF) are both exchange-traded funds - VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS Index, while VTIP is a Inflation-Protected Bonds fund tracking the Bloomberg U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. Both are passively managed. Over the past 10 years, VMBS returned 1.36%/yr vs 3.09%/yr for VTIP. A 0.52 correlation means they provide meaningful diversification when combined. VMBS charges 0.04%/yr vs 0.03%/yr for VTIP.
Performance
VMBS vs. VTIP - Performance Comparison
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Returns By Period
In the year-to-date period, VMBS achieves a 0.87% return, which is significantly lower than VTIP's 1.85% return. Over the past 10 years, VMBS has underperformed VTIP with an annualized return of 1.36%, while VTIP has yielded a comparatively higher 3.09% annualized return.
VMBS
- 1D
- -0.19%
- 1M
- 1.09%
- YTD
- 0.87%
- 6M
- 1.43%
- 1Y
- 6.51%
- 3Y*
- 4.69%
- 5Y*
- 0.53%
- 10Y*
- 1.36%
VTIP
- 1D
- -0.04%
- 1M
- -0.06%
- YTD
- 1.85%
- 6M
- 1.95%
- 1Y
- 4.51%
- 3Y*
- 5.25%
- 5Y*
- 3.37%
- 10Y*
- 3.09%
VMBS vs. VTIP - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 0.87% | 8.36% | 1.70% | 5.34% | -11.90% | -1.28% | 3.76% | 6.19% | 0.91% | 2.47% |
VTIP Vanguard Short-Term Inflation-Protected Securities ETF | 1.85% | 6.07% | 4.74% | 4.62% | -2.94% | 5.36% | 4.95% | 4.86% | 0.56% | 0.82% |
Correlation
The correlation between VMBS and VTIP 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 (3Y) Calculated over the trailing 3-year period | 0.68 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.61 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.54 |
Correlation (All Time) Calculated using the full available price history since Oct 16, 2012 | 0.52 |
The correlation between VMBS and VTIP shifts across timeframes, from 0.52 (1 year) to 0.68 (3 years), reflecting how their relationship changes across market environments.
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Return for Risk
VMBS vs. VTIP — Risk / Return Rank
VMBS
VTIP
VMBS vs. VTIP - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Mortgage-Backed Securities ETF (VMBS) and Vanguard Short-Term Inflation-Protected Securities ETF (VTIP). 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 | VTIP | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -1.64 | ||
| Sortino ratioReturn per unit of downside risk | -3.11 | ||
| Omega ratioGain probability vs. loss probability | 1.26 | 1.65 | -0.39 |
| Calmar ratioReturn relative to maximum drawdown | 2.28 | 6.57 | -4.29 |
| Martin ratioReturn relative to average drawdown | 7.36 | 25.36 | -18.00 |
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Drawdowns
VMBS vs. VTIP - Drawdown Comparison
The maximum VMBS drawdown since its inception was -17.47%, which is greater than VTIP's maximum drawdown of -6.27%. Use the drawdown chart below to compare losses from any high point for VMBS and VTIP.
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Drawdown Indicators
| VMBS | VTIP | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.47% | -6.27% | -11.20% |
Max Drawdown (1Y)Largest decline over 1 year | -2.68% | -0.70% | -1.98% |
Max Drawdown (3Y)Largest decline over 3 years | -7.65% | -0.98% | -6.67% |
Max Drawdown (5Y)Largest decline over 5 years | -17.12% | -5.50% | -11.62% |
Max Drawdown (10Y)Largest decline over 10 years | -17.47% | -6.27% | -11.20% |
Current DrawdownCurrent decline from peak | -1.12% | -0.22% | -0.90% |
Average DrawdownAverage peak-to-trough decline | -2.49% | -1.04% | -1.45% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.83% | 0.18% | +0.65% |
Volatility
VMBS vs. VTIP - Volatility Comparison
Vanguard Mortgage-Backed Securities ETF (VMBS) has a higher volatility of 1.57% compared to Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) at 0.40%. This indicates that VMBS's price experiences larger fluctuations and is considered to be riskier than VTIP based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| VMBS | VTIP | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.57% | 0.40% | +1.17% |
Volatility (6M)Calculated over the trailing 6-month period | 3.23% | 1.04% | +2.19% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.29% | 1.50% | +2.79% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.77% | 2.77% | +4.00% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.40% | 2.74% | +2.66% |
VMBS vs. VTIP - Expense Ratio Comparison
VMBS has a 0.04% expense ratio, which is higher than VTIP'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. VTIP - Dividend Comparison
VMBS's dividend yield for the trailing twelve months is around 4.18%, more than VTIP's 3.59% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 4.18% | 4.20% | 3.94% | 3.31% | 2.35% | 1.02% | 2.01% | 2.77% | 2.72% | 2.16% | 2.10% | 2.12% |
VTIP Vanguard Short-Term Inflation-Protected Securities ETF | 3.59% | 3.81% | 2.70% | 2.86% | 6.84% | 4.68% | 1.20% | 1.95% | 2.45% | 1.52% | 0.76% | 0.00% |
Frequently Asked Questions
VMBS and VTIP 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.
VMBS has higher volatility (1.57%) compared to VTIP (0.40%). In terms of maximum drawdown, VMBS dropped -17.47% vs VTIP's -6.27%.
On 10-year performance, VTIP leads with 3.09% vs 1.36% for VMBS. On fees, VTIP is cheaper at 0.03% per year. On volatility, VTIP has been the lower-risk option at 0.40%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, VTIP has performed better with a 3.09% return vs 1.36%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
VTIP is cheaper with a 0.03% expense ratio, compared with 0.04% for VMBS.
VMBS has the higher dividend yield at 4.18%, compared with 3.59% for VTIP.
VMBS is categorized as Mortgage Backed Securities, while VTIP is Inflation-Protected Bonds. VMBS tracks Barclays Capital U.S. MBS Index, while VTIP tracks Bloomberg U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. Their fees differ too: 0.04% for VMBS and 0.03% for VTIP.
VTIP currently has the higher Sharpe Ratio (3.07 vs 1.43), 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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