The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between BSV and SCHP? And which fund is better?
BSV and SCHP have the same expense ratio: 0.05%. BSV is mostly comprised of AAA bonds and SCHP has a high exposure to AAA bond. Overall, BSV has provided lower returns than SCHP over the past ten years.
In this article, we’ll compare BSV vs. SCHP. We’ll look at performance and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss BSV’s and SCHP’s industry exposure, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| BSV | SCHP | |
| Name | Vanguard Short-Term Bond Index Fund ETF Shares | Schwab U.S. TIPS ETF |
| Category | Short-Term Bond | Inflation-Protected Bond |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 67.71B | 18.41B |
| Avg. Return | 2.27% | 3.92% |
| Div. Yield | 1.48% | 1.97% |
| Expense Ratio | 0.05% | 0.05% |
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
BSV’s dividend yield is 0.49% lower than that of SCHP (1.48% vs. 1.97%). Also, BSV yielded on average 1.64% less per year over the past decade (2.27% vs. 3.92%). BSV and SCHP have the same expense ratio: 0.05%.
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.
| SCHP Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| BSV | SCHP | |
| Mean Return | 0.16 | 0.28 |
| R-squared | 78.38 | 66.16 |
| Std. Deviation | 1.33 | 4.32 |
| Alpha | 0.21 | -0.5 |
| Beta | 0.38 | 1.17 |
| Sharpe Ratio | 0.98 | 0.64 |
| Treynor Ratio | 3.33 | 2.31 |
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Standard Deviation of 1.33 with a Mean Return of 0.16 and a Treynor Ratio of 3.33. Its Sharpe Ratio is 0.98 while BSV’s R-squared is 78.38. Furthermore, the fund has a Beta of 0.38 and a Alpha of 0.21.
The Schwab U.S. TIPS ETF (SCHP) has a Standard Deviation of 4.32 with a Beta of 1.17 and a Sharpe Ratio of 0.64. Its Mean Return is 0.28 while SCHP’s Treynor Ratio is 2.31. Furthermore, the fund has a Alpha of -0.5 and a R-squared of 66.16.
BSV’s Mean Return is 0.12 points lower than that of SCHP and its R-squared is 12.22 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than SCHP. The Alpha and Beta of BSV are 0.71 points higher and 0.79 points lower than SCHP’s Alpha and Beta.
Performance
Annual Returns
| Year | BSV | SCHP |
| 2020 | 4.67% | 10.94% |
| 2019 | 4.92% | 8.36% |
| 2018 | 1.34% | -1.31% |
| 2017 | 1.2% | 2.95% |
| 2016 | 1.42% | 4.6% |
| 2015 | 0.92% | -1.5% |
| 2014 | 1.32% | 3.56% |
| 2013 | 0.17% | -8.66% |
| 2012 | 1.98% | 6.83% |
| 2011 | 3.04% | 13.38% |
| 2010 | 4.0% | 0.0% |
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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BSV | $10,000 | $12,294 | 2.27% |
| SCHP | $10,000 | $14,418 | 3.92% |
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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
BSV’s CAGR is 1.64 percentage points lower than that of SCHP and as a result, would have yielded $2,124 less on a $10,000 investment. Thus, BSV performed worse than SCHP by 1.64% annually.
Current recommendations:
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.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
