VTEC vs. PZA

Last updated Jun 4, 2026

VTEC (Vanguard California Tax-Exempt Bond ETF) and PZA (Invesco National AMT-Free Municipal Bond ETF) are both Municipal Bonds funds - VTEC tracks the S&P California AMT-Free Municipal Bond Index while PZA tracks the BofA ML National Long-Term Core Plus Municipal Securities Index. Both are passively managed. Over the past year, VTEC returned 6.69% vs 9.00% for PZA. A 0.76 correlation means they provide meaningful diversification when combined. VTEC charges 0.08%/yr vs 0.28%/yr for PZA.

Performance

VTEC vs. PZA - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard California Tax-Exempt Bond ETF (VTEC) and Invesco National AMT-Free Municipal Bond ETF (PZA). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, VTEC achieves a 0.98% return, which is significantly lower than PZA's 2.34% return.

VTEC

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

PZA

• 1D: -0.13%
• 1M: 0.79%
• YTD: 2.34%
• 6M: 2.56%
• 1Y: 9.00%
• 3Y*: 3.28%
• 5Y*: -0.02%
• 10Y*: 1.86%

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

VTEC vs. PZA - Yearly Performance Comparison

	2026 (YTD)	2025	2024
VTEC Vanguard California Tax-Exempt Bond ETF	0.98%	3.98%	1.42%
PZA Invesco National AMT-Free Municipal Bond ETF	2.34%	1.81%	1.64%

Correlation

The correlation between VTEC and PZA is 0.72, 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	0.72
Correlation (All Time) Calculated using the full available price history since Jan 31, 2024	0.76

The correlation between VTEC and PZA has been stable across timeframes, ranging from 0.72 to 0.76 - a consistent structural relationship.

Return for Risk

VTEC vs. PZA — Risk / Return Rank

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

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

PZA

PZA Risk / Return Rank: 64
PZA Sharpe Ratio Rank: 64
PZA Sortino Ratio Rank: 67
PZA Omega Ratio Rank: 77
PZA Calmar Ratio Rank: 57
PZA Martin Ratio Rank: 57

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.

VTEC vs. PZA - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard California Tax-Exempt Bond ETF (VTEC) and Invesco National AMT-Free Municipal Bond ETF (PZA). 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.

	VTEC	PZA	Difference
Sharpe ratio Return per unit of total volatility	2.39	2.14	+0.24
Sortino ratio Return per unit of downside risk	3.53	3.11	+0.42
Omega ratio Gain probability vs. loss probability	1.52	1.46	+0.05
Calmar ratio Return relative to maximum drawdown	2.35	2.84	-0.49
Martin ratio Return relative to average drawdown	7.83	10.04	-2.21
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

VTEC vs. PZA - Sharpe Ratio Comparison

The current VTEC Sharpe Ratio is 2.39, which is comparable to the PZA Sharpe Ratio of 2.14. The chart below compares the historical Sharpe Ratios of VTEC and PZA, 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

	VTEC	PZA	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	2.39	2.14	+0.24
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	—	-0.00	—
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	—	0.26	—
Sharpe Ratio (All Time) Calculated using the full available price history	0.73	0.43	+0.30

Drawdowns

VTEC vs. PZA - Drawdown Comparison

The maximum VTEC drawdown since its inception was -4.50%, smaller than the maximum PZA drawdown of -24.49%. Use the drawdown chart below to compare losses from any high point for VTEC and PZA.

Drawdown Indicators

	VTEC	PZA	Difference
Max Drawdown Largest peak-to-trough decline	-4.50%	-24.49%	+19.99%
Max Drawdown (1Y) Largest decline over 1 year	-2.85%	-3.18%	+0.33%
Max Drawdown (3Y) Largest decline over 3 years	—	-7.89%	—
Max Drawdown (5Y) Largest decline over 5 years	—	-18.55%	—
Max Drawdown (10Y) Largest decline over 10 years	—	-21.69%	—
Current Drawdown Current decline from peak	-0.82%	-1.23%	+0.41%
Average Drawdown Average peak-to-trough decline	-1.12%	-3.95%	+2.83%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.86%	0.90%	-0.04%

Volatility

VTEC vs. PZA - Volatility Comparison

The current volatility for Vanguard California Tax-Exempt Bond ETF (VTEC) is 0.86%, while Invesco National AMT-Free Municipal Bond ETF (PZA) has a volatility of 1.48%. This indicates that VTEC experiences smaller price fluctuations and is considered to be less risky than PZA based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	VTEC	PZA	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.86%	1.48%	-0.62%
Volatility (6M) Calculated over the trailing 6-month period	1.87%	2.89%	-1.02%
Volatility (1Y) Calculated over the trailing 1-year period	2.82%	4.22%	-1.40%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	3.76%	6.00%	-2.24%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	3.76%	7.08%	-3.32%

VTEC vs. PZA - Expense Ratio Comparison

VTEC has a 0.08% expense ratio, which is lower than PZA's 0.28% expense ratio.

Dividends

VTEC vs. PZA - Dividend Comparison

VTEC's dividend yield for the trailing twelve months is around 3.16%, less than PZA's 3.64% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
PZA Invesco National AMT-Free Municipal Bond ETF	3.64%	3.55%	3.22%	2.91%	2.68%	2.34%	2.44%	2.81%	3.19%	3.04%	3.23%	3.59%
VTEC Vanguard California Tax-Exempt Bond ETF	3.16%	3.13%	2.54%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%

Frequently Asked Questions

Can I hold both VTEC and PZA in my portfolio?

VTEC and PZA have a correlation of 0.72, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VTEC or PZA?

PZA has higher volatility (1.48%) compared to VTEC (0.86%). In terms of maximum drawdown, VTEC dropped -4.50% vs PZA's -24.49%.

Which ETF is better, VTEC or PZA?

On 1-year performance, PZA leads with 9.00% vs 6.69% for VTEC. On fees, VTEC is cheaper at 0.08% per year. On volatility, VTEC has been the lower-risk option at 0.86%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, VTEC or PZA?

Over the 1-year period, PZA has performed better with a 9.00% return vs 6.69%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VTEC or PZA?

VTEC is cheaper with a 0.08% expense ratio, compared with 0.28% for PZA.

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

PZA has the higher dividend yield at 3.64%, compared with 3.16% for VTEC.

What is the main difference between VTEC and PZA?

VTEC tracks S&P California AMT-Free Municipal Bond Index, while PZA tracks BofA ML National Long-Term Core Plus Municipal Securities Index. They also come from different issuers: Vanguard and Invesco. Their fees differ too: 0.08% for VTEC and 0.28% for PZA.

Which has better risk-adjusted returns?

VTEC currently has the higher Sharpe Ratio (2.39 vs 2.14), 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.