VTEB vs. BND
VTEB (Vanguard Tax-Exempt Bond ETF) and BND (Vanguard Total Bond Market ETF) are both exchange-traded funds - VTEB is a Municipal Bonds fund tracking the S&P National AMT-Free Municipal Bond 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, VTEB returned 2.02%/yr vs 1.57%/yr for BND. A 0.68 correlation means they provide meaningful diversification when combined. Both charge a 0.03% expense ratio.
Performance
VTEB vs. BND - Performance Comparison
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Returns By Period
In the year-to-date period, VTEB achieves a 1.54% return, which is significantly higher than BND's 0.60% return. Over the past 10 years, VTEB has outperformed BND with an annualized return of 2.02%, while BND has yielded a comparatively lower 1.57% annualized return.
VTEB
- 1D
- 0.10%
- 1M
- 1.32%
- YTD
- 1.54%
- 6M
- 1.95%
- 1Y
- 6.68%
- 3Y*
- 3.38%
- 5Y*
- 0.88%
- 10Y*
- 2.02%
BND
- 1D
- 0.08%
- 1M
- 1.11%
- YTD
- 0.60%
- 6M
- 0.87%
- 1Y
- 4.86%
- 3Y*
- 4.03%
- 5Y*
- 0.16%
- 10Y*
- 1.57%
VTEB vs. BND - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
VTEB Vanguard Tax-Exempt Bond ETF | 1.54% | 3.72% | 1.31% | 6.15% | -7.99% | 1.14% | 5.19% | 7.35% | 1.04% | 4.87% |
BND Vanguard Total Bond Market ETF | 0.60% | 7.08% | 1.38% | 5.65% | -13.11% | -1.86% | 7.71% | 8.84% | -0.12% | 3.57% |
Correlation
The correlation between VTEB and BND is 0.69, 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 | 0.69 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.79 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.74 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.68 |
Correlation (All Time) Calculated using the full available price history since Aug 25, 2015 | 0.68 |
The correlation between VTEB and BND shifts across timeframes, from 0.68 (all time) to 0.79 (3 years), reflecting how their relationship changes across market environments.
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Return for Risk
VTEB vs. BND — Risk / Return Rank
VTEB
BND
VTEB vs. BND - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Tax-Exempt Bond ETF (VTEB) 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.
| VTEB | BND | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | +1.20 | ||
| Sortino ratioReturn per unit of downside risk | +1.74 | ||
| Omega ratioGain probability vs. loss probability | 1.55 | 1.23 | +0.32 |
| Calmar ratioReturn relative to maximum drawdown | 2.48 | 1.82 | +0.65 |
| Martin ratioReturn relative to average drawdown | 8.75 | 5.29 | +3.46 |
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Drawdowns
VTEB vs. BND - Drawdown Comparison
The maximum VTEB drawdown since its inception was -17.00%, smaller than the maximum BND drawdown of -18.58%. Use the drawdown chart below to compare losses from any high point for VTEB and BND.
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Drawdown Indicators
| VTEB | BND | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.00% | -18.58% | +1.58% |
Max Drawdown (1Y)Largest decline over 1 year | -2.71% | -2.68% | -0.03% |
Max Drawdown (3Y)Largest decline over 3 years | -5.53% | -5.92% | +0.39% |
Max Drawdown (5Y)Largest decline over 5 years | -12.64% | -17.91% | +5.27% |
Max Drawdown (10Y)Largest decline over 10 years | -17.00% | -18.58% | +1.58% |
Current DrawdownCurrent decline from peak | -0.44% | -2.04% | +1.60% |
Average DrawdownAverage peak-to-trough decline | -2.32% | -3.06% | +0.74% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.77% | 0.92% | -0.15% |
Volatility
VTEB vs. BND - Volatility Comparison
The current volatility for Vanguard Tax-Exempt Bond ETF (VTEB) is 0.92%, while Vanguard Total Bond Market ETF (BND) has a volatility of 1.28%. This indicates that VTEB experiences smaller price fluctuations and is considered to be less risky 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
| VTEB | BND | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 0.92% | 1.28% | -0.36% |
Volatility (6M)Calculated over the trailing 6-month period | 2.04% | 2.74% | -0.70% |
Volatility (1Y)Calculated over the trailing 1-year period | 2.67% | 3.72% | -1.05% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 3.90% | 6.03% | -2.13% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.26% | 5.53% | -0.27% |
VTEB vs. BND - Expense Ratio Comparison
Both VTEB and BND have an expense ratio of 0.03%, making them cost-effective options compared to the broader market, where average expense ratios typically range from 0.3% to 0.9%.
Dividends
VTEB vs. BND - Dividend Comparison
VTEB's dividend yield for the trailing twelve months is around 3.35%, less than BND's 3.95% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
BND Vanguard Total Bond Market ETF | 3.95% | 3.86% | 3.67% | 3.09% | 2.60% | 2.12% | 2.38% | 2.72% | 2.81% | 2.54% | 2.51% | 2.57% |
VTEB Vanguard Tax-Exempt Bond ETF | 3.35% | 3.29% | 3.14% | 2.79% | 2.09% | 1.64% | 1.99% | 2.30% | 2.25% | 1.96% | 1.66% | 0.58% |
Frequently Asked Questions
VTEB and BND have a correlation of 0.69, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.
BND has higher volatility (1.28%) compared to VTEB (0.92%). In terms of maximum drawdown, VTEB dropped -17.00% vs BND's -18.58%.
On 10-year performance, VTEB leads with 2.02% vs 1.57% for BND. Both ETFs have the same 0.03% expense ratio. On volatility, VTEB has been the lower-risk option at 0.92%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, VTEB has performed better with a 2.02% return vs 1.57%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
VTEB and BND have the same expense ratio: 0.03% per year.
BND has the higher dividend yield at 3.95%, compared with 3.35% for VTEB.
VTEB is categorized as Municipal Bonds, while BND is Total Bond Market. VTEB tracks S&P National AMT-Free Municipal Bond Index, while BND tracks Bloomberg U.S. Aggregate Float Adjusted Index.
VTEB currently has the higher Sharpe Ratio (2.52 vs 1.31), 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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