BSV vs. IAU: What’s The Difference?

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

The expense ratio of BSV is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%). BSV is mostly comprised of AAA bonds while IAU has a high exposure to the technology sector. Overall, BSV has provided lower returns than IAU over the past ten years.

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

Summary

BSV IAU
Name Vanguard Short-Term Bond Index Fund ETF Shares iShares Gold Trust
Category Short-Term Bond N/A
Issuer Vanguard iShares
AUM 67.71B 28.61B
Avg. Return 2.27% 6.03%
Div. Yield 1.48% 0.0%
Expense Ratio 0.05% 0.25%

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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

BSV’s dividend yield is 1.48% higher than that of IAU (1.48% vs. 0.0%). Also, BSV yielded on average 3.76% less per year over the past decade (2.27% vs. 6.03%). The expense ratio of BSV is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%).

Fund Composition

Holdings

BSV - 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.

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

Risk Analysis

BSV IAU
Mean Return 0.16 0.23
R-squared 78.38 16.03
Std. Deviation 1.33 16.97
Alpha 0.21 4.16
Beta 0.38 0.48
Sharpe Ratio 0.98 0.13
Treynor Ratio 3.33 1.5

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

The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a Treynor Ratio of 1.5 and a R-squared of 16.03. Its Beta is 0.48 while IAU’s Standard Deviation is 16.97. Furthermore, the fund has a Sharpe Ratio of 0.13 and a Alpha of 4.16.

BSV’s Mean Return is 0.07 points lower than that of IAU and its R-squared is 62.35 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than IAU. The Alpha and Beta of BSV are 3.95 points lower and 0.10 points lower than IAU’s Alpha and Beta.

Performance

Annual Returns

BSV vs. IAU - Annual Returns

Year BSV IAU
2020 4.67% 23.86%
2019 4.92% 18.54%
2018 1.34% -1.39%
2017 1.2% 11.58%
2016 1.42% 8.85%
2015 0.92% -11.65%
2014 1.32% -0.44%
2013 0.17% -27.96%
2012 1.98% 8.37%
2011 3.04% 8.66%
2010 4.0% 27.93%

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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.

Portfolio Growth

BSV vs. IAU - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
IAU $10,000 $16,786 6.03%

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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.

BSV’s CAGR is 3.76 percentage points lower than that of IAU and as a result, would have yielded $4,001 less on a $10,000 investment. Thus, BSV performed worse than IAU by 3.76% annually.


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