BSV vs. VCSH: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between BSV and VCSH? And which fund is better?

BSV and VCSH have the same expense ratio: 0.05%. BSV is mostly comprised of AAA bonds and VCSH has a high exposure to BBB bond. Overall, BSV has provided lower returns than VCSH over the past ten years.

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

Summary

BSV VCSH
Name Vanguard Short-Term Bond Index Fund ETF Shares Vanguard Short-Term Corporate Bond Index Fund ETF Shares
Category Short-Term Bond Short-Term Bond
Issuer Vanguard Vanguard
AUM 67.71B 47.88B
Avg. Return 2.27% 3.12%
Div. Yield 1.48% 1.89%
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 Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) is a Short-Term Bond fund that is issued by Vanguard. It currently has 47.88B total assets under management and has yielded an average annual return of 3.12% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.05%.

BSV’s dividend yield is 0.41% lower than that of VCSH (1.48% vs. 1.89%). Also, BSV yielded on average 0.85% less per year over the past decade (2.27% vs. 3.12%). BSV and VCSH have the same expense ratio: 0.05%.

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.

VCSH - Holdings

VCSH Bond Sectors Weight
BBB 47.49%
A 43.06%
AA 8.45%
AAA 0.95%
Below B 0.03%
Others 0.02%
B 0.0%
BB 0.0%
US Government 0.0%

VCSH’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 47.49%, 43.06%, 8.45%, 0.95%, and 0.03%. The fund is less weighted towards Others (0.02%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

BSV VCSH
Mean Return 0.16 0.24
R-squared 78.38 37.53
Std. Deviation 1.33 2.34
Alpha 0.21 0.93
Beta 0.38 0.48
Sharpe Ratio 0.98 0.97
Treynor Ratio 3.33 4.75

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

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Alpha of 0.93 with a Mean Return of 0.24 and a Standard Deviation of 2.34. Its Treynor Ratio is 4.75 while VCSH’s Beta is 0.48. Furthermore, the fund has a Sharpe Ratio of 0.97 and a R-squared of 37.53.

BSV’s Mean Return is 0.08 points lower than that of VCSH and its R-squared is 40.85 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than VCSH. The Alpha and Beta of BSV are 0.72 points lower and 0.10 points lower than VCSH’s Alpha and Beta.

Performance

Annual Returns

BSV vs. VCSH - Annual Returns

Year BSV VCSH
2020 4.67% 5.08%
2019 4.92% 6.85%
2018 1.34% 0.91%
2017 1.2% 2.45%
2016 1.42% 2.63%
2015 0.92% 1.25%
2014 1.32% 1.96%
2013 0.17% 1.37%
2012 1.98% 5.74%
2011 3.04% 2.94%
2010 4.0% 5.51%

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 VCSH, returning 6.85% on an annual basis. The poorest year for VCSH in the last ten years was 2018, with a yield of 0.91%. Most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2016, and 2011, when gains were 2.45%, 2.63%, and 2.94% respectively.

Portfolio Growth

BSV vs. VCSH - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,294 2.27%
VCSH $10,000 $13,569 3.12%

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 VCSH, the end total would have been $13,569. This equates to a $3,569 profit over 10 years and a compound annual growth rate (CAGR) of 3.12%.

BSV’s CAGR is 0.85 percentage points lower than that of VCSH and as a result, would have yielded $1,275 less on a $10,000 investment. Thus, BSV performed worse than VCSH by 0.85% annually.


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