BSV vs. VYM: What’s The Difference?

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

The expense ratio of BSV is 0.01 percentage points lower than VYM’s (0.05% vs. 0.06%). BSV is mostly comprised of AAA bonds while VYM has a high exposure to the financial services sector. Overall, BSV has provided lower returns than VYM over the past ten years.

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

Summary

BSV VYM
Name Vanguard Short-Term Bond Index Fund ETF Shares Vanguard High Dividend Yield Index Fund ETF Shares
Category Short-Term Bond Large Value
Issuer Vanguard Vanguard
AUM 67.71B 48.5B
Avg. Return 2.27% 12.20%
Div. Yield 1.48% 2.79%
Expense Ratio 0.05% 0.06%

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 High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.

BSV’s dividend yield is 1.31% lower than that of VYM (1.48% vs. 2.79%). Also, BSV yielded on average 9.93% less per year over the past decade (2.27% vs. 12.20%). The expense ratio of BSV is 0.01 percentage points lower than VYM’s (0.05% vs. 0.06%).

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.

VYM - Holdings

VYM Holdings Weight
JPMorgan Chase & Co 3.53%
Johnson & Johnson 3.28%
The Home Depot Inc 2.59%
Procter & Gamble Co 2.48%
Bank of America Corp 2.35%
Exxon Mobil Corp 2.02%
Comcast Corp Class A 1.96%
Verizon Communications Inc 1.75%
Intel Corp 1.71%
Cisco Systems Inc 1.69%

VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.

Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.

Risk Analysis

BSV VYM
Mean Return 0.16 1.04
R-squared 78.38 88.88
Std. Deviation 1.33 12.69
Alpha 0.21 -0.7
Beta 0.38 0.88
Sharpe Ratio 0.98 0.93
Treynor Ratio 3.33 13.24

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

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Alpha of -0.7 with a Treynor Ratio of 13.24 and a R-squared of 88.88. Its Beta is 0.88 while VYM’s Standard Deviation is 12.69. Furthermore, the fund has a Sharpe Ratio of 0.93 and a Mean Return of 1.04.

BSV’s Mean Return is 0.88 points lower than that of VYM and its R-squared is 10.50 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than VYM. The Alpha and Beta of BSV are 0.91 points higher and 0.50 points lower than VYM’s Alpha and Beta.

Performance

Annual Returns

BSV vs. VYM - Annual Returns

Year BSV VYM
2020 4.67% 1.14%
2019 4.92% 24.2%
2018 1.34% -5.87%
2017 1.2% 16.42%
2016 1.42% 16.87%
2015 0.92% 0.33%
2014 1.32% 13.47%
2013 0.17% 30.26%
2012 1.98% 12.68%
2011 3.04% 10.5%
2010 4.0% 14.17%

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 VYM, returning 30.26% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.87%. Most years the Vanguard High Dividend Yield Index Fund ETF Shares has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 12.68%, 13.47%, and 14.17% respectively.

Portfolio Growth

BSV vs. VYM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
VYM $10,000 $33,914 12.20%

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 VYM, the end total would have been $33,914. This equates to a $23,914 profit over 11 years and a compound annual growth rate (CAGR) of 12.20%.

BSV’s CAGR is 9.93 percentage points lower than that of VYM and as a result, would have yielded $21,129 less on a $10,000 investment. Thus, BSV performed worse than VYM by 9.93% annually.


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