SHM vs VTEB Stock Comparison: AI Score, Valuation, Performance and Upside
SHM (short-term muni bond ETF) and VTEB (broad municipal bond ETF) both provide federal-tax-exempt municipal bond income but with different duration profiles — SHM targets 1-5 year maturities for lower interest rate risk at a higher expense ratio (0.20%), while VTEB provides comprehensive investment-grade muni market exposure across all maturities at minimal cost (0.05%) but with higher duration and therefore more interest rate sensitivity. SHM is for stability-focused tax-exempt income; VTEB is for comprehensive low-cost muni exposure.
SHM vs VTEB is short-duration muni ETF prioritizing interest rate stability (SHM's 1-5 year maturity focus reducing duration risk for investors who want federal-tax-exempt income without significant bond price volatility, managed by Nuveen's muni expertise) versus broad investment-grade muni market ETF at lowest cost (VTEB's full-spectrum AMT-free municipal bond portfolio at 0.05% capturing the full muni market's diversification and yield) — duration-managed stability versus comprehensive low-cost muni exposure.
VTEB holds the edge across 4 of 5 key metrics in this comparison. VTEB has delivered stronger 1-year price return (+6.01% vs +2.54% for SHM).
- →Want federal-tax-exempt income from investment-grade municipal bonds with minimal interest rate risk — SHM's short 1-5 year maturity provides stable income without significant price volatility from rate changes
- →Are in high federal tax brackets (32%+ or 37%) where municipal bond tax exemption creates significantly higher after-tax income than equivalent taxable bonds
- →Have shorter investment time horizons or hold the muni allocation as a cash-substitute with better after-tax yield than money market funds
- →Want comprehensive investment-grade municipal bond market exposure — VTEB's 6,000+ bond portfolio across all maturities provides maximum diversification and captures the full yield curve of tax-exempt bonds
- →Value Vanguard's cost leadership at 0.05% as maximizing after-tax yield versus higher-cost muni funds that provide similar exposure at 2-4x the cost
- →Are comfortable accepting VTEB's longer duration (~6-7 years) as reasonable for a long-term core tax-exempt bond allocation, understanding that interim price volatility recovers over the holding period
| Metric | SHM | VTEB |
|---|---|---|
| ETF score | 29.0 | 56.0 |
| Latest close | $47.84 | $50.26 |
| 1M return | +0.20% | +0.22% |
| 6M return | +0.64% | +1.03% |
| 1Y return | +2.54% | +6.01% |
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | SHM | VTEB |
|---|---|---|
| 1Y ago | $10.51K (+5.1%) started 2025-07-08 | $10.94K (+9.4%) started 2025-07-08 |
| 5Y ago | $11.42K (+14.2%) started 2021-07-08 | $12K (+20.0%) started 2021-07-08 |
| 10Y ago | $13.27K (+32.7%) started 2016-07-08 | $15.77K (+57.7%) started 2016-07-08 |
Hypothetical — past performance does not guarantee future results.
| Metric | SHM | VTEB |
|---|---|---|
| Expense ratio | 0.20% | 0.03% |
| Total assets (AUM) | $3.47B | $48.79B |
| Dividend yield | 2.66% | 3.34% |
| Trailing P/E | N/A | N/A |
| Beta | 0.12 | 0.25 |
| 52-week change | 2.54% | 6.01% |
| Metric | SHM | VTEB |
|---|---|---|
| 1Y return | +2.54% | +6.01% |
| 6M return | +0.64% | +1.03% |
| 1M return | +0.20% | +0.22% |
| 1Y Sharpe ratio | -1.53 | 0.51 |
| Beta | 0.12 | 0.25 |
| Dividend yield | 2.66% | 3.34% |
| 5Y CAGR | +0.95% | +0.75% |
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | SHM | VTEB |
|---|---|---|---|
| 1Y | Growth | +2.54% | +6.01% |
| CAGR | +2.54% | +6.01% | |
| Sharpe ratio | -1.53 | 0.51 | |
| Max drawdown | 1.13% | 2.71% | |
| Max daily drop | 0.31% | 0.86% | |
| Max wkly drop | 0.75% | 1.43% | |
| 5Y | Growth | +4.82% | +3.78% |
| CAGR | +0.95% | +0.75% | |
| Sharpe ratio | -1.70 | -0.94 | |
| Max drawdown | 6.55% | 12.64% | |
| Max daily drop | 0.88% | 2.01% | |
| Max wkly drop | 1.67% | 3.45% | |
| 10Y | Growth | +13.13% | +20.73% |
| CAGR | +1.24% | +1.90% | |
| Sharpe ratio | -0.97 | -0.47 | |
| Max drawdown | 11.61% | 17.00% | |
| Max daily drop | 3.72% | 5.85% | |
| Max wkly drop | 8.50% | 10.60% |
| Category | SHM | VTEB |
|---|---|---|
| Fund name | State Street SPDR Nuveen ICE Short Term Municipal Bond ETF | Vanguard Tax-Exempt Bond Index Fund ETF Shares |
| Type | ETF | ETF |
| Expense ratio | 0.20% | 0.03% |
| Total assets (AUM) | $3.47B | $48.79B |
| Dividend yield | 2.66% | 3.34% |
- →Federal tax-exempt income favors high-bracket investors — muni bond interest is exempt from federal income tax; at the 37% federal bracket, a 3% muni yield equals a 4.76% taxable equivalent yield, making munis more attractive than equivalent corporate bonds for high-income investors
- →Short duration (1-5 year) reduces interest rate risk significantly — SHM's short maturity focus means much lower price volatility from interest rate changes (duration ~2.5-3 years vs. broad muni funds' 5-7 years); suitable for investors who want tax-exempt income without significant bond price volatility
- →Investment-grade credit quality — SHM's holdings must be investment grade (BBB/Baa or higher), providing credit quality standards similar to other investment-grade bond funds
- →AMT-free construction eliminates AMT exposure entirely — VTEB specifically excludes AMT-subject bonds, making all income fully federal-tax-exempt regardless of AMT status; this simplification removes a common complexity for muni bond investors
- →Broader diversification across maturities and issuers — VTEB's 6,000+ bond portfolio across all maturities provides maximum diversification across state and local government issuers; individual issuer defaults are minimally impactful
- →0.05% expense ratio among the lowest for muni ETFs — Vanguard's cost leadership extends to fixed income; VTEB's minimal expense ratio maximizes after-cost yield for investors
- →Expense ratio higher than Treasury ETFs — SHM's ~0.20% expense ratio is higher than near-zero-cost Treasury ETFs; the after-cost yield pickup from municipal tax exemption must exceed the expense ratio premium to justify SHM over Treasuries
- →State and local government credit risk — municipal bond defaults are rare but do occur (Puerto Rico, Detroit, Jefferson County Alabama were notable cases); SHM's investment-grade requirement limits but doesn't eliminate credit risk
- →AMT exposure for some muni bonds — certain private activity municipal bonds generate income subject to the Alternative Minimum Tax (AMT); AMT-subject investors should verify SHM's AMT exposure before assuming full tax exemption
- →Higher duration than SHM means more interest rate risk — VTEB's broad maturity index includes long-duration bonds (duration ~6-7 years); each 1% rise in interest rates causes approximately 6-7% price decline in VTEB versus ~2.5-3% for SHM
- →Broader muni market credit exposure — VTEB includes bonds from a wide range of municipal issuers; while investment-grade, some lower-rated investment-grade munis (BBB) carry meaningful default risk in fiscal stress
- →Lower yield than longer-duration or high-yield muni funds — as a broad investment-grade fund, VTEB's yield reflects the full market; investors willing to accept more credit or duration risk can find higher-yielding muni alternatives
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