BND and BNDX are not substitutes. Own both, or own one market.

Own both if you want investment-grade bonds in the United States and investment-grade bonds issued in other currencies, hedged back to the U.S. dollar. Investment-grade means higher-rated bonds, not high-yield. Own only one of the funds if you want only one of those markets.

Vanguard Total Bond Market ETF, BND, is the U.S. market, and it charges 0.03%. Vanguard Total International Bond ETF, BNDX, is that second market, and it charges 0.07%. On $100,000, the difference is $40 a year.

They hold different bond markets

BND tracks the Bloomberg U.S. Aggregate Float Adjusted Index. Its April 28, 2026 prospectus describes that index as the public, investment-grade, taxable bond market in the United States, including government, corporate and international dollar-denominated bonds, plus mortgage-backed and asset-backed securities. Inflation-protected and tax-exempt bonds are left out.

BNDX tracks the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index, hedged to the dollar. The Feb. 27, 2026 prospectus says the index holds investment-grade government, agency, corporate and securitized bonds from developed and emerging markets, issued in currencies other than the dollar.

The fund hedges that currency exposure with forward contracts. That prospectus says the fund does this to track the dollar-hedged index and to limit the effect of currency moves. It also says the hedge can give up gains the fund might have earned without it, can add to costs, and can lose money if the other side of a contract fails to pay.

Each ETF is a share class of a larger fund. As of Sept. 30, Vanguard reported $389.3 billion in the fund that includes BND, of which the ETF shares were $161.4 billion. The fund that includes BNDX had $121.7 billion, of which the ETF shares were $82.9 billion, on its fact sheet the same day.

BND held 11,434 bonds. U.S. government debt, which Vanguard defines as Treasuries, agency debt and agency mortgage-backed securities, was 69.0% of the ETF.

BNDX held 6,837 bonds. Of those bonds, France was 11.5%, Japan 11.3%, Germany 10.2%, the United Kingdom 8.2% and Italy 7.5%.

The 10-year gap was already in the indexes

These are total returns on net asset value, the value of what each fund holds, through Sept. 30, 2026, from the same Vanguard fact sheets. Figures under one year are cumulative. Longer figures are average annual returns.

BNDX was ahead over one, five and 10 years. BND was ahead over three. Over the 10 years, BNDX returned 0.17 percentage points a year more.

That gap was already in the indexes. On the same fact sheets, the hedged international index returned 1.42% a year over those 10 years, and BND's index returned 1.17%, a difference of 0.25 percentage points a year.

The gap between the funds was smaller than that, because BNDX fell further behind its index than BND did. Over those 10 years, neither fund beat the index it tracks.

State tax favors BND, except in three states

For 2025, Vanguard reported that 44.06% of BND's ordinary dividends came from U.S. government obligations, against 0.86% for BNDX. Vanguard says that income is generally exempt from state income tax in most states. Where a state allows the exclusion, it falls almost entirely on BND.

California, Connecticut and New York allow that exclusion only if a fund held at least 50% of its assets in U.S. government obligations at each quarter-end of the tax year. Vanguard's supplement marks the funds that met the test. Neither fund is marked, so a resident of those three states gets no exclusion on either fund's 2025 dividends from this income.

Own BND for the U.S. market, and own BNDX for bonds issued in other currencies, hedged back to the dollar. Own both if you want both markets. The higher 10-year return is not a reason to choose one fund instead of the other, because it came from a different index.