The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and SHY is a iShares Short Government fund. So, what’s the difference between BSV and SHY? And which fund is better?
The expense ratio of BSV is 0.10 percentage points lower than SHY’s (0.05% vs. 0.15%). BSV is mostly comprised of AAA bonds and SHY has a high exposure to AAA bond. Overall, BSV has provided higher returns than SHY over the past ten years.
In this article, we’ll compare BSV vs. SHY. We’ll look at annual returns and fund composition, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss BSV’s and SHY’s industry exposure, risk metrics, and performance and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||iShares 1-3 Year Treasury Bond ETF|
|Category||Short-Term Bond||Short Government|
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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
BSV’s dividend yield is 1.02% higher than that of SHY (1.48% vs. 0.46%). Also, BSV yielded on average 1.00% more per year over the past decade (2.27% vs. 1.27%). The expense ratio of BSV is 0.10 percentage points lower than SHY’s (0.05% vs. 0.15%).
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|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.
|SHY Bond Sectors||Weight|
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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.
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The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Alpha of 0.21 with a Treynor Ratio of 3.33 and a Beta of 0.38. Its Standard Deviation is 1.33 while BSV’s Mean Return is 0.16. Furthermore, the fund has a Sharpe Ratio of 0.98 and a R-squared of 78.38.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Alpha of -0.03 with a Mean Return of 0.09 and a Standard Deviation of 0.89. Its Treynor Ratio is 2.6 while SHY’s R-squared is 39.11. Furthermore, the fund has a Beta of 0.18 and a Sharpe Ratio of 0.54.
BSV’s Mean Return is 0.07 points higher than that of SHY and its R-squared is 39.27 points higher. With a Standard Deviation of 1.33, BSV is slightly more volatile than SHY. The Alpha and Beta of BSV are 0.24 points higher and 0.20 points higher than SHY’s Alpha and Beta.
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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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% 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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.
BSV’s CAGR is 1.00 percentage points higher than that of SHY and as a result, would have yielded $1,299 more on a $10,000 investment. Thus, BSV outperformed SHY by 1.00% annually.
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