The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between BSV and PFF? And which fund is better?
The expense ratio of BSV is 0.41 percentage points lower than PFF’s (0.05% vs. 0.46%). BSV is mostly comprised of AAA bonds while PFF has a high exposure to the utilities sector. Overall, BSV has provided lower returns than PFF over the past ten years.
In this article, we’ll compare BSV vs. PFF. We’ll look at fund composition and portfolio growth, as well as at their performance and industry exposure. Moreover, I’ll also discuss BSV’s and PFF’s annual returns, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||iShares Preferred and Income Securities ETF|
|Category||Short-Term Bond||Preferred Stock|
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
BSV’s dividend yield is 2.99% lower than that of PFF (1.48% vs. 4.47%). Also, BSV yielded on average 4.63% less per year over the past decade (2.27% vs. 6.90%). The expense ratio of BSV is 0.41 percentage points lower than PFF’s (0.05% vs. 0.46%).
|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.
|Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A||2.54%|
|BlackRock Cash Funds Treasury SL Agency||2.3%|
|Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-||1.79%|
|Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-||1.49%|
|ArcelorMittal S.A. 5.5%||1.36%|
|Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A||1.35%|
|Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B||1.14%|
|NextEra Energy Inc Unit||1.12%|
|Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4||1.08%|
|Avantor Inc Ser A||0.99%|
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Sharpe Ratio of 0.98 with a Mean Return of 0.16 and a Alpha of 0.21. Its Treynor Ratio is 3.33 while BSV’s R-squared is 78.38. Furthermore, the fund has a Beta of 0.38 and a Standard Deviation of 1.33.
The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a R-squared of 9.39 and a Beta of 0.81. Its Treynor Ratio is 6.79 while PFF’s Standard Deviation is 7.87. Furthermore, the fund has a Mean Return of 0.52 and a Alpha of 3.45.
BSV’s Mean Return is 0.36 points lower than that of PFF and its R-squared is 68.99 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than PFF. The Alpha and Beta of BSV are 3.24 points lower and 0.43 points lower than PFF’s Alpha and Beta.
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 PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
BSV’s CAGR is 4.63 percentage points lower than that of PFF and as a result, would have yielded $7,487 less on a $10,000 investment. Thus, BSV performed worse than PFF by 4.63% annually.
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