BSV vs. SDY: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between BSV and SDY? And which fund is better?

The expense ratio of BSV is 0.30 percentage points lower than SDY’s (0.05% vs. 0.35%). BSV is mostly comprised of AAA bonds while SDY has a high exposure to the financial services sector. Overall, BSV has provided lower returns than SDY over the past ten years.

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

Summary

BSV SDY
Name Vanguard Short-Term Bond Index Fund ETF Shares SPDR S&P Dividend ETF
Category Short-Term Bond Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 67.71B 19.67B
Avg. Return 2.27% 12.44%
Div. Yield 1.48% 2.65%
Expense Ratio 0.05% 0.35%

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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

BSV’s dividend yield is 1.17% lower than that of SDY (1.48% vs. 2.65%). Also, BSV yielded on average 10.17% less per year over the past decade (2.27% vs. 12.44%). The expense ratio of BSV is 0.30 percentage points lower than SDY’s (0.05% vs. 0.35%).

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.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

Risk Analysis

BSV SDY
Mean Return 0.16 1.07
R-squared 78.38 83.62
Std. Deviation 1.33 12.9
Alpha 0.21 -0.1
Beta 0.38 0.87
Sharpe Ratio 0.98 0.95
Treynor Ratio 3.33 13.94

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

The SPDR S&P Dividend ETF (SDY) has a R-squared of 83.62 with a Alpha of -0.1 and a Beta of 0.87. Its Sharpe Ratio is 0.95 while SDY’s Standard Deviation is 12.9. Furthermore, the fund has a Treynor Ratio of 13.94 and a Mean Return of 1.07.

BSV’s Mean Return is 0.91 points lower than that of SDY and its R-squared is 5.24 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than SDY. The Alpha and Beta of BSV are 0.31 points higher and 0.49 points lower than SDY’s Alpha and Beta.

Performance

Annual Returns

BSV vs. SDY - Annual Returns

Year BSV SDY
2020 4.67% 1.78%
2019 4.92% 23.37%
2018 1.34% -2.73%
2017 1.2% 15.84%
2016 1.42% 20.17%
2015 0.92% -0.7%
2014 1.32% 13.8%
2013 0.17% 30.09%
2012 1.98% 11.51%
2011 3.04% 7.28%
2010 4.0% 16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

BSV vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

BSV’s CAGR is 10.17 percentage points lower than that of SDY and as a result, would have yielded $22,021 less on a $10,000 investment. Thus, BSV performed worse than SDY by 10.17% annually.


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