BSV vs. VTIP: What’s The Difference?

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

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

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

Summary

BSV VTIP
Name Vanguard Short-Term Bond Index Fund ETF Shares Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Category Short-Term Bond Inflation-Protected Bond
Issuer Vanguard Vanguard
AUM 67.71B 50.67B
Avg. Return 2.27% 1.79%
Div. Yield 1.48% 1.35%
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 Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.

BSV’s dividend yield is 0.13% higher than that of VTIP (1.48% vs. 1.35%). Also, BSV yielded on average 0.48% more per year over the past decade (2.27% vs. 1.79%). BSV and VTIP 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.

VTIP - Holdings

VTIP Bond Sectors Weight
AAA 99.87%
Others 0.13%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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 VTIP
Mean Return 0.16 0
R-squared 78.38 0
Std. Deviation 1.33 0
Alpha 0.21 0
Beta 0.38 0
Sharpe Ratio 0.98 0
Treynor Ratio 3.33 0

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

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Alpha of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.

BSV’s Mean Return is 0.16 points higher than that of VTIP and its R-squared is 78.38 points higher. With a Standard Deviation of 1.33, BSV is slightly more volatile than VTIP. The Alpha and Beta of BSV are 0.21 points higher and 0.38 points higher than VTIP’s Alpha and Beta.

Performance

Annual Returns

BSV vs. VTIP - Annual Returns

Year BSV VTIP
2020 4.67% 4.97%
2019 4.92% 4.83%
2018 1.34% 0.54%
2017 1.2% 0.82%
2016 1.42% 2.71%
2015 0.92% -0.15%
2014 1.32% -1.17%
2013 0.17% -1.55%
2012 1.98% 0.0%
2011 3.04% 0.0%
2010 4.0% 0.0%

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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.

Portfolio Growth

BSV vs. VTIP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $11,679 2.27%
VTIP $10,000 $11,305 1.79%

A $10,000 investment in BSV would have resulted in a final balance of $11,679. This is a profit of $1,679 over 7 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.

BSV’s CAGR is 0.48 percentage points higher than that of VTIP and as a result, would have yielded $374 more on a $10,000 investment. Thus, BSV outperformed VTIP by 0.48% annually.


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