Skip to content

IGSB vs. VBK: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between IGSB and VBK? And which fund is better?

The expense ratio of IGSB is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%). IGSB is mostly comprised of BBB bonds while VBK has a high exposure to the technology sector. Overall, IGSB has provided lower returns than VBK over the past 11 years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IGSBVBK
NameiShares 1-5 Year Investment Grade Corporate Bond ETFVanguard Small-Cap Growth Index Fund ETF Shares
CategoryShort-Term BondSmall Growth
IssueriSharesVanguard
AUM26.63B37.89B
Avg. Return2.51%16.53%
Div. Yield2.02%0.45%
Expense Ratio0.06%0.07%

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

IGSB’s dividend yield is 1.57% higher than that of VBK (2.02% vs. 0.45%). Also, IGSB yielded on average 14.02% less per year over the past decade (2.51% vs. 16.53%). The expense ratio of IGSB is 0.01 percentage points lower than VBK’s (0.06% 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).

Fund Composition

Holdings

IGSB - Holdings

IGSB Bond SectorsWeight
BBB50.48%
A40.04%
AA7.46%
AAA2.21%
BB0.09%
Below B0.0%
B0.0%
US Government0.0%
Others-0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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).

Risk Analysis

IGSBVBK
Mean Return0.191.22
R-squared26.1380.56
Std. Deviation217.95
Alpha0.69-2.81
Beta0.341.18
Sharpe Ratio0.820.78
Treynor Ratio4.8211.18

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Mean Return of 0.19 with a Treynor Ratio of 4.82 and a R-squared of 26.13. Its Standard Deviation is 2 while IGSB’s Alpha is 0.69. Furthermore, the fund has a Beta of 0.34 and a Sharpe Ratio of 0.82.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Treynor Ratio of 11.18 with a Sharpe Ratio of 0.78 and a R-squared of 80.56. Its Standard Deviation is 17.95 while VBK’s Beta is 1.18. Furthermore, the fund has a Mean Return of 1.22 and a Alpha of -2.81.

IGSB’s Mean Return is 1.03 points lower than that of VBK and its R-squared is 54.43 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than VBK. The Alpha and Beta of IGSB are 3.50 points higher and 0.84 points lower than VBK’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!

Performance

Annual Returns

IGSB vs. VBK - Annual Returns

YearIGSBVBK
20205.26%35.29%
20197.01%32.75%
20181.34%-5.68%
20171.41%21.9%
20161.77%10.74%
20150.7%-2.51%
20140.74%4.02%
20131.03%38.18%
20123.28%17.67%
20111.34%-1.43%
20103.69%30.87%

IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% respectively.

The year 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

IGSB vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IGSB$10,000$13,1032.51%
VBK$10,000$48,63916.53%

A $10,000 investment in IGSB would have resulted in a final balance of $13,103. This is a profit of $3,103 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.51%.

With a $10,000 investment in VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

IGSB’s CAGR is 14.02 percentage points lower than that of VBK and as a result, would have yielded $35,536 less on a $10,000 investment. Thus, IGSB performed worse than VBK by 14.02% annually.


Current recommendations:

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.

Leave a Reply

Your email address will not be published.