The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between BSV and EMB? And which fund is better?
The expense ratio of BSV is 0.34 percentage points lower than EMB’s (0.05% vs. 0.39%). BSV is mostly comprised of AAA bonds and EMB has a high exposure to BBB bond. Overall, BSV has provided lower returns than EMB over the past ten years.
In this article, we’ll compare BSV vs. EMB. We’ll look at industry exposure and holdings, as well as at their performance and risk metrics. Moreover, I’ll also discuss BSV’s and EMB’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
Summary
| BSV | EMB | |
| Name | Vanguard Short-Term Bond Index Fund ETF Shares | iShares J.P. Morgan USD Emerging Markets Bond ETF |
| Category | Short-Term Bond | Emerging Markets Bond |
| Issuer | Vanguard | iShares |
| AUM | 67.71B | 19.76B |
| Avg. Return | 2.27% | 6.43% |
| Div. Yield | 1.48% | 3.85% |
| Expense Ratio | 0.05% | 0.39% |
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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
BSV’s dividend yield is 2.37% lower than that of EMB (1.48% vs. 3.85%). Also, BSV yielded on average 4.16% less per year over the past decade (2.27% vs. 6.43%). The expense ratio of BSV is 0.34 percentage points lower than EMB’s (0.05% vs. 0.39%).
Fund Composition
Holdings
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
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.
| EMB Bond Sectors | Weight |
| BBB | 33.79% |
| B | 21.97% |
| BB | 16.92% |
| A | 13.67% |
| AA | 7.97% |
| Below B | 4.49% |
| Others | 1.11% |
| AAA | 0.09% |
| US Government | 0.0% |
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
Risk Analysis
| BSV | EMB | |
| Mean Return | 0.16 | 0.44 |
| R-squared | 78.38 | 23.34 |
| Std. Deviation | 1.33 | 8.44 |
| Alpha | 0.21 | 0.89 |
| Beta | 0.38 | 1.36 |
| Sharpe Ratio | 0.98 | 0.55 |
| Treynor Ratio | 3.33 | 3.24 |
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Alpha of 0.21 with a Treynor Ratio of 3.33 and a Standard Deviation of 1.33. Its R-squared is 78.38 while BSV’s Beta is 0.38. Furthermore, the fund has a Sharpe Ratio of 0.98 and a Mean Return of 0.16.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Treynor Ratio of 3.24 with a Mean Return of 0.44 and a Alpha of 0.89. Its R-squared is 23.34 while EMB’s Standard Deviation is 8.44. Furthermore, the fund has a Beta of 1.36 and a Sharpe Ratio of 0.55.
BSV’s Mean Return is 0.28 points lower than that of EMB and its R-squared is 55.04 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than EMB. The Alpha and Beta of BSV are 0.68 points lower and 0.98 points lower than EMB’s Alpha and Beta.
Performance
Annual Returns
| Year | BSV | EMB |
| 2020 | 4.67% | 5.48% |
| 2019 | 4.92% | 15.57% |
| 2018 | 1.34% | -5.67% |
| 2017 | 1.2% | 9.98% |
| 2016 | 1.42% | 9.41% |
| 2015 | 0.92% | 0.43% |
| 2014 | 1.32% | 6.69% |
| 2013 | 0.17% | -7.42% |
| 2012 | 1.98% | 17.64% |
| 2011 | 3.04% | 7.2% |
| 2010 | 4.0% | 11.47% |
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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BSV | $10,000 | $12,785 | 2.27% |
| EMB | $10,000 | $19,295 | 6.43% |
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 EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
BSV’s CAGR is 4.16 percentage points lower than that of EMB and as a result, would have yielded $6,510 less on a $10,000 investment. Thus, BSV performed worse than EMB by 4.16% annually.
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