SHM vs SUB: Which ETF Is Better in 2026?
A metric-by-metric comparison of State Street SPDR Nuveen ICE Short Term Municipal Bond ETF (SHM) and iShares Short-Term National Muni Bond ETF (SUB) — both Municipal Bonds funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
SHM and SUB compete directly — both are Municipal Bonds funds chasing the same job in a portfolio. That makes this a genuine either/or: the index each tracks, what it costs, and how it has handled drawdowns are what separate them, not the broad exposure they give you.
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — SUB scores higher: 53.2 (Grade C) versus 49.7 for SHM. That doesn't make SHM a bad fund; it means SUB currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Head-to-Head: Every Metric
| SHM | SUB | |
|---|---|---|
| Category | Municipal Bonds | Municipal Bonds |
| Expense ratio | 0.20% | 0.07% |
| Fund size (AUM) | $3.5B | $11.4B |
| Dividend yield | 2.66% | 2.52% |
| 1-year return | +2.08% | +1.99% |
| 3-year return | +8.32% | +8.97% |
| Volatility | 1.35% | 1.10% |
| Max drawdown | -2.03% | -1.23% |
| Sharpe ratio | -2.16 | -2.73 |
| ETFValuer score | 49.7 | 53.2 |
| Grade | D | C |
| Overall rank | #380 | #358 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
SUB is the cheaper fund, charging 0.07% a year versus 0.20% for SHM — a gap of 0.13 percentage points (about $13.00/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What SHM's Fees Cost You
SHM charges an expense ratio of 0.20% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, SUB returned +8.97% versus +8.32% for SHM — a gap of about 0.7 percentage points. On risk, SUB has held up better historically, with a shallower max drawdown (-1.23% vs. -2.03%). SHM currently has the better risk-adjusted return (Sharpe ratio of -2.16 vs. -2.73), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), SHM and SUB show a moderate correlation of 0.721 — related but meaningfully different. That's loose enough that the two funds do behave differently in a meaningful share of market conditions — holding both is defensible if you want exposure to each mandate.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.721 | Moderate — related but meaningfully different |
| R-squared | 52.0% | 52.0% of SHM's daily moves are explained by SUB's |
| Tracking error (annualised) | 1.36% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | SHM +2.53% · SUB +2.89% | SUB ahead by 0.37 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, SHM finished as much as +0.7 points ahead of SUB at the best extreme and -1.2 points at the worst — a 1.9-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
SHM and SUB hold 2 of the same companies among their top 10 positions. Those shared names make up 2.6% of SHM and 0.5% of SUB. That's modest duplication — the funds are mostly distinct at the top, so holding both can still add diversification.
| Shared Holding | SHM Weight | SUB Weight |
|---|---|---|
| State of California | 2.18% | 0.27% |
| University of California | 0.41% | 0.25% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean SHM if…
- You care about return per unit of risk — its Sharpe ratio of -2.16 beats -2.73
Lean SUB if…
- You want the lower running cost — 0.07% vs 0.20%, about $13 a year less on a $10,000 position
- It has been the calmer ride (1.1% volatility vs 1.4%) with a shallower worst-case fall (-1.2% vs -2.0%)
- You want the deeper, more liquid market ($11B in assets vs $3B) and the tighter spread (3.368% vs 7.912%)
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is SHM or SUB better?
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — SUB scores higher: 53.2 (Grade C) versus 49.7 for SHM. That doesn't make SHM a bad fund; it means SUB currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Which has the lower expense ratio, SHM or SUB?
SUB currently has the lower expense ratio (0.07% vs. 0.20%).
Can I hold both SHM and SUB?
Yes, and it may be worth doing. SHM and SUB correlate at only 0.72 over the past 3.0 years, so they behave differently enough that holding both is a genuine diversification decision rather than a redundant one. Size each to the role you want it to play.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.