The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between BND and BSV? And which fund is better?
The expense ratio of BND is 0.02 percentage points lower than BSV’s (0.03% vs. 0.05%). BND is mostly comprised of AAA bonds and BSV has a high exposure to AAA bond. Overall, BND has provided higher returns than BSV over the past ten years.
In this article, we’ll compare BND vs. BSV. We’ll look at industry exposure and performance, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss BND’s and BSV’s fund composition, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||Vanguard Short-Term Bond Index Fund ETF Shares|
|Category||Intermediate-Term Bond||Short-Term Bond|
The Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
BND’s dividend yield is 0.54% higher than that of BSV (2.02% vs. 1.48%). Also, BND yielded on average 1.82% more per year over the past decade (4.09% vs. 2.27%). The expense ratio of BND is 0.02 percentage points lower than BSV’s (0.03% vs. 0.05%).
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|BND Bond Sectors||Weight|
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Treynor Ratio of 2.64 with a Mean Return of 0.28 and a Standard Deviation of 3.14. Its Alpha is -0.14 while BND’s Beta is 1.04. Furthermore, the fund has a Sharpe Ratio of 0.88 and a R-squared of 99.34.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Sharpe Ratio of 0.98 with a Treynor Ratio of 3.33 and a Alpha of 0.21. Its Beta is 0.38 while BSV’s Mean Return is 0.16. Furthermore, the fund has a R-squared of 78.38 and a Standard Deviation of 1.33.
BND’s Mean Return is 0.12 points higher than that of BSV and its R-squared is 20.96 points higher. With a Standard Deviation of 3.14, BND is slightly more volatile than BSV. The Alpha and Beta of BND are 0.35 points lower and 0.66 points higher than BSV’s Alpha and Beta.
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BND had its best year in 2019 with an annual return of 8.71%. BND’s worst year over the past decade yielded -2.14% and occurred in 2013. In most years the Vanguard Total Bond Market Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.62%, 4.04%, and 5.96% respectively.
The year 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BND would have resulted in a final balance of $15,456. This is a profit of $5,456 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.09%.
With a $10,000 investment in BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
BND’s CAGR is 1.82 percentage points higher than that of BSV and as a result, would have yielded $2,671 more on a $10,000 investment. Thus, BND outperformed BSV by 1.82% annually.
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