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BSV vs. ACWI: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and ACWI is a iShares N/A fund. So, what’s the difference between BSV and ACWI? And which fund is better?

The expense ratio of BSV is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%). BSV is mostly comprised of AAA bonds while ACWI has a high exposure to the technology sector. Overall, BSV has provided lower returns than ACWI over the past ten years.

In this article, we’ll compare BSV vs. ACWI. We’ll look at performance and holdings, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss BSV’s and ACWI’s portfolio growth, risk metrics, and fund composition and examine how these affect their overall returns.

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Summary

BSVACWI
NameVanguard Short-Term Bond Index Fund ETF SharesiShares MSCI ACWI ETF
CategoryShort-Term BondN/A
IssuerVanguardiShares
AUM67.71B16.85B
Avg. Return2.27%10.21%
Div. Yield1.48%1.39%
Expense Ratio0.05%0.32%

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%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

BSV’s dividend yield is 0.09% higher than that of ACWI (1.48% vs. 1.39%). Also, BSV yielded on average 7.94% less per year over the past decade (2.27% vs. 10.21%). The expense ratio of BSV is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%).

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Fund Composition

Holdings

BSV - Holdings

BSV Bond SectorsWeight
AAA71.65%
BBB13.08%
A11.95%
AA3.28%
Others0.03%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%

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.

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

BSVACWI
Mean Return0.160.89
R-squared78.3899.96
Std. Deviation1.3314.05
Alpha0.210.15
Beta0.381
Sharpe Ratio0.980.71
Treynor Ratio3.339.45

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a R-squared of 78.38 with a Treynor Ratio of 3.33 and a Sharpe Ratio of 0.98. Its Beta is 0.38 while BSV’s Alpha is 0.21. Furthermore, the fund has a Mean Return of 0.16 and a Standard Deviation of 1.33.

The iShares MSCI ACWI ETF (ACWI) has a Alpha of 0.15 with a Mean Return of 0.89 and a Standard Deviation of 14.05. Its Sharpe Ratio is 0.71 while ACWI’s Beta is 1. Furthermore, the fund has a Treynor Ratio of 9.45 and a R-squared of 99.96.

BSV’s Mean Return is 0.73 points lower than that of ACWI and its R-squared is 21.58 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than ACWI. The Alpha and Beta of BSV are 0.06 points higher and 0.62 points lower than ACWI’s Alpha and Beta.

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Performance

Annual Returns

BSV vs. ACWI - Annual Returns

YearBSVACWI
20204.67%16.38%
20194.92%26.7%
20181.34%-9.15%
20171.2%24.35%
20161.42%8.22%
20150.92%-2.39%
20141.32%4.64%
20130.17%22.91%
20121.98%15.99%
20113.04%-7.6%
20104.0%12.31%

BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

BSV vs. ACWI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BSV$10,000$12,7852.27%
ACWI$10,000$27,24110.21%

A $10,000 investment in BSV would have resulted in a final balance of $12,785. This is a profit of $2,785 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

BSV’s CAGR is 7.94 percentage points lower than that of ACWI and as a result, would have yielded $14,456 less on a $10,000 investment. Thus, BSV performed worse than ACWI by 7.94% annually.


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