BSV vs. TLT: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and TLT is a iShares Long Government fund. So, what’s the difference between BSV and TLT? And which fund is better?

The expense ratio of BSV is 0.10 percentage points lower than TLT’s (0.05% vs. 0.15%). BSV is mostly comprised of AAA bonds and TLT has a high exposure to AAA bond. Overall, BSV has provided lower returns than TLT over the past ten years.

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

Summary

BSV TLT
Name Vanguard Short-Term Bond Index Fund ETF Shares iShares 20+ Year Treasury Bond ETF
Category Short-Term Bond Long Government
Issuer Vanguard iShares
AUM 67.71B 15.15B
Avg. Return 2.27% 9.00%
Div. Yield 1.48% 1.5%
Expense Ratio 0.05% 0.15%

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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

BSV’s dividend yield is 0.02% lower than that of TLT (1.48% vs. 1.5%). Also, BSV yielded on average 6.72% less per year over the past decade (2.27% vs. 9.00%). The expense ratio of BSV is 0.10 percentage points lower than TLT’s (0.05% vs. 0.15%).

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.

TLT - Holdings

TLT 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%

TLT’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 TLT
Mean Return 0.16 0.63
R-squared 78.38 68.76
Std. Deviation 1.33 12.76
Alpha 0.21 -2.83
Beta 0.38 3.54
Sharpe Ratio 0.98 0.55
Treynor Ratio 3.33 1.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a R-squared of 68.76 and a Sharpe Ratio of 0.55. Its Standard Deviation is 12.76 while TLT’s Treynor Ratio is 1.82. Furthermore, the fund has a Beta of 3.54 and a Alpha of -2.83.

BSV’s Mean Return is 0.47 points lower than that of TLT and its R-squared is 9.62 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than TLT. The Alpha and Beta of BSV are 3.04 points higher and 3.16 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

BSV vs. TLT - Annual Returns

Year BSV TLT
2020 4.67% 17.92%
2019 4.92% 14.93%
2018 1.34% -2.07%
2017 1.2% 8.92%
2016 1.42% 1.36%
2015 0.92% -1.65%
2014 1.32% 27.35%
2013 0.17% -13.91%
2012 1.98% 3.25%
2011 3.04% 33.6%
2010 4.0% 9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

BSV vs. TLT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
TLT $10,000 $23,809 9.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

BSV’s CAGR is 6.72 percentage points lower than that of TLT and as a result, would have yielded $11,024 less on a $10,000 investment. Thus, BSV performed worse than TLT by 6.72% annually.


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