The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and VBR is a Vanguard Small Value fund. So, what’s the difference between BSV and VBR? And which fund is better?
The expense ratio of BSV is 0.02 percentage points lower than VBR’s (0.05% vs. 0.07%). BSV is mostly comprised of AAA bonds while VBR has a high exposure to the financial services sector. Overall, BSV has provided lower returns than VBR over the past ten years.
In this article, we’ll compare BSV vs. VBR. We’ll look at fund composition and industry exposure, as well as at their holdings and risk metrics. Moreover, I’ll also discuss BSV’s and VBR’s annual returns, performance, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Short-Term Bond||Small Value|
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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
BSV’s dividend yield is 0.12% lower than that of VBR (1.48% vs. 1.6%). Also, BSV yielded on average 10.01% less per year over the past decade (2.27% vs. 12.28%). The expense ratio of BSV is 0.02 percentage points lower than VBR’s (0.05% vs. 0.07%).
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.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|Howmet Aerospace Inc||0.44%|
|Apollo Global Management Inc Class A||0.42%|
|Brown & Brown Inc||0.41%|
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
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 Sharpe Ratio of 0.98 with a R-squared of 78.38 and a Standard Deviation of 1.33. Its Alpha is 0.21 while BSV’s Beta is 0.38. Furthermore, the fund has a Treynor Ratio of 3.33 and a Mean Return of 0.16.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a Mean Return of 1.08 and a Sharpe Ratio of 0.67. Its R-squared is 82.2 while VBR’s Alpha is -5.09. Furthermore, the fund has a Standard Deviation of 18.37 and a Treynor Ratio of 9.15.
BSV’s Mean Return is 0.92 points lower than that of VBR and its R-squared is 3.82 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than VBR. The Alpha and Beta of BSV are 5.30 points higher and 0.85 points lower than VBR’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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% 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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
BSV’s CAGR is 10.01 percentage points lower than that of VBR and as a result, would have yielded $19,826 less on a $10,000 investment. Thus, BSV performed worse than VBR by 10.01% 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.