BSV vs. IGSB: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between BSV and IGSB? And which fund is better?

The expense ratio of BSV is 0.01 percentage points lower than IGSB’s (0.05% vs. 0.06%). BSV is mostly comprised of AAA bonds and IGSB has a high exposure to BBB bond. Overall, BSV has provided lower returns than IGSB over the past ten years.

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

Summary

BSV IGSB
Name Vanguard Short-Term Bond Index Fund ETF Shares iShares 1-5 Year Investment Grade Corporate Bond ETF
Category Short-Term Bond Short-Term Bond
Issuer Vanguard iShares
AUM 67.71B 26.63B
Avg. Return 2.27% 2.51%
Div. Yield 1.48% 2.02%
Expense Ratio 0.05% 0.06%

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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

BSV’s dividend yield is 0.54% lower than that of IGSB (1.48% vs. 2.02%). Also, BSV yielded on average 0.24% less per year over the past decade (2.27% vs. 2.51%). The expense ratio of BSV is 0.01 percentage points lower than IGSB’s (0.05% vs. 0.06%).

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.

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

BSV IGSB
Mean Return 0.16 0.19
R-squared 78.38 26.13
Std. Deviation 1.33 2
Alpha 0.21 0.69
Beta 0.38 0.34
Sharpe Ratio 0.98 0.82
Treynor Ratio 3.33 4.82

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

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Treynor Ratio of 4.82 with a Beta of 0.34 and a Mean Return of 0.19. Its R-squared is 26.13 while IGSB’s Standard Deviation is 2. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Alpha of 0.69.

BSV’s Mean Return is 0.03 points lower than that of IGSB and its R-squared is 52.25 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than IGSB. The Alpha and Beta of BSV are 0.48 points lower and 0.04 points higher than IGSB’s Alpha and Beta.

Performance

Annual Returns

BSV vs. IGSB - Annual Returns

Year BSV IGSB
2020 4.67% 5.26%
2019 4.92% 7.01%
2018 1.34% 1.34%
2017 1.2% 1.41%
2016 1.42% 1.77%
2015 0.92% 0.7%
2014 1.32% 0.74%
2013 0.17% 1.03%
2012 1.98% 3.28%
2011 3.04% 1.34%
2010 4.0% 3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

BSV vs. IGSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
IGSB $10,000 $13,103 2.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

BSV’s CAGR is 0.24 percentage points lower than that of IGSB and as a result, would have yielded $318 less on a $10,000 investment. Thus, BSV performed worse than IGSB by 0.24% annually.


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