VTIP vs. VMBS
VTIP (Vanguard Short-Term Inflation-Protected Securities ETF) and VMBS (Vanguard Mortgage-Backed Securities ETF) are both exchange-traded funds - VTIP is a Inflation-Protected Bonds fund tracking the Bloomberg U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, while VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS Index. Both are passively managed. Over the past 10 years, VTIP returned 3.09%/yr vs 1.36%/yr for VMBS. A 0.52 correlation means they provide meaningful diversification when combined. VTIP charges 0.03%/yr vs 0.04%/yr for VMBS.
Performance
VTIP vs. VMBS - Performance Comparison
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Returns By Period
In the year-to-date period, VTIP achieves a 1.85% return, which is significantly higher than VMBS's 0.87% return. Over the past 10 years, VTIP has outperformed VMBS with an annualized return of 3.09%, while VMBS has yielded a comparatively lower 1.36% annualized return.
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
- 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 vs. VMBS - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
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% |
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% |
Correlation
The correlation between VTIP and VMBS 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 VTIP and VMBS 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
VTIP vs. VMBS — Risk / Return Rank
VTIP
VMBS
VTIP vs. VMBS - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) and Vanguard Mortgage-Backed Securities ETF (VMBS). 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.
| VTIP | VMBS | 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 | 1.65 | 1.26 | +0.39 |
| Calmar ratioReturn relative to maximum drawdown | 6.57 | 2.28 | +4.29 |
| Martin ratioReturn relative to average drawdown | 25.36 | 7.36 | +18.00 |
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Drawdowns
VTIP vs. VMBS - Drawdown Comparison
The maximum VTIP drawdown since its inception was -6.27%, smaller than the maximum VMBS drawdown of -17.47%. Use the drawdown chart below to compare losses from any high point for VTIP and VMBS.
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Drawdown Indicators
| VTIP | VMBS | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -6.27% | -17.47% | +11.20% |
Max Drawdown (1Y)Largest decline over 1 year | -0.70% | -2.68% | +1.98% |
Max Drawdown (3Y)Largest decline over 3 years | -0.98% | -7.65% | +6.67% |
Max Drawdown (5Y)Largest decline over 5 years | -5.50% | -17.12% | +11.62% |
Max Drawdown (10Y)Largest decline over 10 years | -6.27% | -17.47% | +11.20% |
Current DrawdownCurrent decline from peak | -0.22% | -1.12% | +0.90% |
Average DrawdownAverage peak-to-trough decline | -1.04% | -2.49% | +1.45% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.18% | 0.83% | -0.65% |
Volatility
VTIP vs. VMBS - Volatility Comparison
The current volatility for Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) is 0.40%, while Vanguard Mortgage-Backed Securities ETF (VMBS) has a volatility of 1.57%. This indicates that VTIP experiences smaller price fluctuations and is considered to be less risky than VMBS based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| VTIP | VMBS | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 0.40% | 1.57% | -1.17% |
Volatility (6M)Calculated over the trailing 6-month period | 1.04% | 3.23% | -2.19% |
Volatility (1Y)Calculated over the trailing 1-year period | 1.50% | 4.29% | -2.79% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 2.77% | 6.77% | -4.00% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 2.74% | 5.40% | -2.66% |
VTIP vs. VMBS - Expense Ratio Comparison
VTIP has a 0.03% expense ratio, which is lower than VMBS's 0.04% expense ratio. Despite the difference, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.
Dividends
VTIP vs. VMBS - Dividend Comparison
VTIP's dividend yield for the trailing twelve months is around 3.59%, less than VMBS's 4.18% 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
VTIP and VMBS 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, VTIP dropped -6.27% vs VMBS's -17.47%.
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.
VTIP is categorized as Inflation-Protected Bonds, while VMBS is Mortgage Backed Securities. VTIP tracks Bloomberg U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, while VMBS tracks Barclays Capital U.S. MBS Index. Their fees differ too: 0.03% for VTIP and 0.04% for VMBS.
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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