The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between BSV and SCHB? And which fund is better?
The expense ratio of BSV is 0.02 percentage points higher than SCHB’s (0.05% vs. 0.03%). BSV is mostly comprised of AAA bonds while SCHB has a high exposure to the technology sector. Overall, BSV has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare BSV vs. SCHB. We’ll look at risk metrics and fund composition, as well as at their holdings and industry exposure. Moreover, I’ll also discuss BSV’s and SCHB’s annual returns, performance, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||Schwab U.S. Broad Market ETF|
|Category||Short-Term Bond||Large Blend|
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 Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
BSV’s dividend yield is 0.09% higher than that of SCHB (1.48% vs. 1.39%). Also, BSV yielded on average 12.16% less per year over the past decade (2.27% vs. 14.43%). The expense ratio of BSV is 0.02 percentage points higher than SCHB’s (0.05% vs. 0.03%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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.
|Facebook Inc A||1.88%|
|Alphabet Inc A||1.66%|
|Alphabet Inc Class C||1.61%|
|Berkshire Hathaway Inc Class B||1.19%|
|JPMorgan Chase & Co||1.06%|
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a R-squared of 78.38 with a Alpha of 0.21 and a Treynor Ratio of 3.33. Its Sharpe Ratio is 0.98 while BSV’s Standard Deviation is 1.33. Furthermore, the fund has a Beta of 0.38 and a Mean Return of 0.16.
The Schwab U.S. Broad Market ETF (SCHB) has a Alpha of -0.58 with a Mean Return of 1.23 and a Treynor Ratio of 13.58. Its R-squared is 99.33 while SCHB’s Standard Deviation is 14.12. Furthermore, the fund has a Sharpe Ratio of 1 and a Beta of 1.04.
BSV’s Mean Return is 1.07 points lower than that of SCHB and its R-squared is 20.95 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than SCHB. The Alpha and Beta of BSV are 0.79 points higher and 0.66 points lower than SCHB’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 2013 was the strongest year for SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BSV would have resulted in a final balance of $12,294. This is a profit of $2,294 over 10 years and amounts to a compound annual growth rate (CAGR) of 2.27%.
With a $10,000 investment in SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.
BSV’s CAGR is 12.16 percentage points lower than that of SCHB and as a result, would have yielded $24,060 less on a $10,000 investment. Thus, BSV performed worse than SCHB by 12.16% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.