The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and VHT is a Vanguard Health fund. So, what’s the difference between BSV and VHT? And which fund is better?
The expense ratio of BSV is 0.05 percentage points lower than VHT’s (0.05% vs. 0.1%). BSV is mostly comprised of AAA bonds while VHT has a high exposure to the healthcare sector. Overall, BSV has provided lower returns than VHT over the past ten years.
In this article, we’ll compare BSV vs. VHT. We’ll look at industry exposure and annual returns, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss BSV’s and VHT’s fund composition, holdings, and performance and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||Vanguard Health Care Index Fund ETF Shares|
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
BSV’s dividend yield is 0.33% higher than that of VHT (1.48% vs. 1.15%). Also, BSV yielded on average 13.77% less per year over the past decade (2.27% vs. 16.04%). The expense ratio of BSV is 0.05 percentage points lower than VHT’s (0.05% vs. 0.1%).
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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.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Beta of 0.38 with a Mean Return of 0.16 and a R-squared of 78.38. Its Alpha is 0.21 while BSV’s Sharpe Ratio is 0.98. Furthermore, the fund has a Treynor Ratio of 3.33 and a Standard Deviation of 1.33.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Standard Deviation of 13.58 with a Sharpe Ratio of 1.13 and a R-squared of 59.86. Its Alpha is 7.99 while VHT’s Treynor Ratio is 20.74. Furthermore, the fund has a Beta of 0.75 and a Mean Return of 1.33.
BSV’s Mean Return is 1.17 points lower than that of VHT and its R-squared is 18.52 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than VHT. The Alpha and Beta of BSV are 7.78 points lower and 0.37 points lower than VHT’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 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% 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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
BSV’s CAGR is 13.77 percentage points lower than that of VHT and as a result, would have yielded $35,679 less on a $10,000 investment. Thus, BSV performed worse than VHT by 13.77% annually.
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