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. SHM has delivered stronger 1-year price return (+0.47% vs -1.45% for VTEB).
- 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 scorei | 24.3 | 24.3 |
| Latest closei | $47.01 | $47.96 |
| 1M returni | -0.19% | -0.25% |
| 3M returni | -0.86% | -3.55% |
| 6M returni | -0.61% | -2.99% |
| 1Y returni | +0.47% | -1.45% |
The ETF score weights long-term returns and risk-adjusted performance most heavily, but still rewards low expense ratios, larger fund size, and broader diversification — so it can favor low-cost, broad, mega-cap funds over smaller thematic or actively-managed funds even when the latter have delivered stronger returns.
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 | $10.32K (+3.2%) started 2025-10-15 | $10.2K (+2.0%) started 2025-10-15 |
| 5Y ago | $11.43K (+14.3%) started 2021-10-15 | $11.81K (+18.1%) started 2021-10-15 |
| 10Y ago | $13.34K (+33.4%) started 2016-10-17 | $15.61K (+56.1%) started 2016-10-17 |
Hypothetical — past performance does not guarantee future results.
| Metric | SHM | VTEB |
|---|---|---|
| Expense ratioi | 0.20% | 0.03% |
| Total assets (AUM)i | $3.46B | $51.71B |
| Dividend yieldi | 2.75% | 3.60% |
| Trailing P/Ei | N/A | N/A |
| Betai | 0.13 | 0.27 |
| 52-week change | 0.47% | -1.45% |
| Metric | SHM | VTEB |
|---|---|---|
| 1Y returni | +0.47% | -1.45% |
| 6M returni | -0.61% | -2.99% |
| 3M returni | -0.86% | -3.55% |
| 1M returni | -0.19% | -0.25% |
| 1Y Sharpe ratio | -2.28 | -1.70 |
| Betai | 0.13 | 0.27 |
| Dividend yieldi | 2.75% | 3.60% |
| 5Y CAGR | +0.81% | +0.26% |
Over the past year, SHM and VTEB have moved strongly in the same direction (correlation of 0.76), based on daily returns.
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 | Growthi | +0.47% | -1.45% |
| CAGRi | +0.47% | -1.45% | |
| Volatilityi | 1.76% | 3.48% | |
| Sharpe ratioi | -2.28 | -1.70 | |
| Sortino ratioi | -2.85 | -2.11 | |
| Max drawdowni | 2.65% | 6.59% | |
| Current drawdowni | 1.21% | 4.28% | |
| Avg drawdowni | 0.42% | 1.19% | |
| Ulcer Indexi | 0.66% | 1.90% | |
| Max daily dropi | 0.43% | 0.86% | |
| Max wkly dropi | 1.42% | 2.61% | |
| 5Y | Growthi | +4.10% | +1.29% |
| CAGRi | +0.81% | +0.26% | |
| Volatilityi | 2.16% | 4.07% | |
| Sharpe ratioi | -1.70 | -1.02 | |
| Sortino ratioi | -2.14 | -1.35 | |
| Max drawdowni | 6.15% | 12.35% | |
| Current drawdowni | 1.21% | 4.28% | |
| Avg drawdowni | 1.80% | 3.73% | |
| Ulcer Indexi | 2.47% | 4.87% | |
| Max daily dropi | 0.88% | 2.01% | |
| Max wkly dropi | 1.67% | 3.45% | |
| 10Y | Growthi | +12.80% | +18.37% |
| CAGRi | +1.21% | +1.70% | |
| Volatilityi | 3.33% | 5.30% | |
| Sharpe ratioi | -0.97 | -0.50 | |
| Sortino ratioi | -1.33 | -0.66 | |
| Max drawdowni | 11.61% | 17.00% | |
| Current drawdowni | 1.21% | 4.28% | |
| Avg drawdowni | 1.30% | 2.44% | |
| Ulcer Indexi | 2.05% | 3.76% | |
| Max daily dropi | 3.72% | 5.85% | |
| Max wkly dropi | 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 ratioi | 0.20% | 0.03% |
| Total assets (AUM)i | $3.46B | $51.71B |
| Dividend yieldi | 2.75% | 3.60% |
- 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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