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.
Summary
| IGSB | VBK | |
| Name | iShares 1-5 Year Investment Grade Corporate Bond ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Short-Term Bond | Small Growth |
| Issuer | iShares | Vanguard |
| AUM | 26.63B | 37.89B |
| Avg. Return | 2.51% | 16.53% |
| Div. Yield | 2.02% | 0.45% |
| Expense Ratio | 0.06% | 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%).
Fund Composition
Holdings
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| 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 | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
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%.
Risk Analysis
| IGSB | VBK | |
| Mean Return | 0.19 | 1.22 |
| R-squared | 26.13 | 80.56 |
| Std. Deviation | 2 | 17.95 |
| Alpha | 0.69 | -2.81 |
| Beta | 0.34 | 1.18 |
| Sharpe Ratio | 0.82 | 0.78 |
| Treynor Ratio | 4.82 | 11.18 |
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.
Performance
Annual Returns
| Year | IGSB | VBK |
| 2020 | 5.26% | 35.29% |
| 2019 | 7.01% | 32.75% |
| 2018 | 1.34% | -5.68% |
| 2017 | 1.41% | 21.9% |
| 2016 | 1.77% | 10.74% |
| 2015 | 0.7% | -2.51% |
| 2014 | 0.74% | 4.02% |
| 2013 | 1.03% | 38.18% |
| 2012 | 3.28% | 17.67% |
| 2011 | 1.34% | -1.43% |
| 2010 | 3.69% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| IGSB | $10,000 | $13,103 | 2.51% |
| VBK | $10,000 | $48,639 | 16.53% |
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.
