The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between IJR and VCIT? And which fund is better?
The expense ratio of IJR is 0.01 percentage points higher than VCIT’s (0.06% vs. 0.05%). IJR also has a high exposure to the industrials sector while VCIT is mostly comprised of BBB bonds. Overall, IJR has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare IJR vs. VCIT. We’ll look at risk metrics and holdings, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss IJR’s and VCIT’s performance, annual returns, and portfolio growth and examine how these affect their overall returns.
Summary
| IJR | VCIT | |
| Name | iShares Core S&P Small-Cap ETF | Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares |
| Category | Small Blend | Corporate Bond |
| Issuer | iShares | Vanguard |
| AUM | 68.64B | 48.39B |
| Avg. Return | 13.97% | 5.84% |
| Div. Yield | 0.96% | 2.33% |
| Expense Ratio | 0.06% | 0.05% |
The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
IJR’s dividend yield is 1.37% lower than that of VCIT (0.96% vs. 2.33%). Also, IJR yielded on average 8.13% more per year over the past decade (13.97% vs. 5.84%). The expense ratio of IJR is 0.01 percentage points higher than VCIT’s (0.06% vs. 0.05%).
Fund Composition
Holdings
| IJR Holdings | Weight |
| BlackRock Cash Funds Treasury SL Agency | 1.08% |
| GameStop Corp Class A | 0.86% |
| Omnicell Inc | 0.61% |
| Stamps.com Inc | 0.58% |
| Saia Inc | 0.57% |
| Power Integrations Inc | 0.57% |
| Exponent Inc | 0.54% |
| NeoGenomics Inc | 0.53% |
| Chart Industries Inc | 0.53% |
| Macy’s Inc | 0.51% |
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
| VCIT Bond Sectors | Weight |
| BBB | 55.28% |
| A | 37.85% |
| AA | 5.22% |
| AAA | 1.57% |
| Below B | 0.08% |
| Others | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| IJR | VCIT | |
| Mean Return | 1.21 | 0.44 |
| R-squared | 76.03 | 63.18 |
| Std. Deviation | 18.68 | 5.08 |
| Alpha | -3.7 | 0.89 |
| Beta | 1.2 | 1.35 |
| Sharpe Ratio | 0.74 | 0.91 |
| Treynor Ratio | 10.77 | 3.43 |
The iShares Core S&P Small-Cap ETF (IJR) has a R-squared of 76.03 with a Sharpe Ratio of 0.74 and a Beta of 1.2. Its Mean Return is 1.21 while IJR’s Standard Deviation is 18.68. Furthermore, the fund has a Treynor Ratio of 10.77 and a Alpha of -3.7.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a R-squared of 63.18 with a Standard Deviation of 5.08 and a Treynor Ratio of 3.43. Its Beta is 1.35 while VCIT’s Mean Return is 0.44. Furthermore, the fund has a Alpha of 0.89 and a Sharpe Ratio of 0.91.
IJR’s Mean Return is 0.77 points higher than that of VCIT and its R-squared is 12.85 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than VCIT. The Alpha and Beta of IJR are 4.59 points lower and 0.15 points lower than VCIT’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | VCIT |
| 2020 | 11.24% | 9.55% |
| 2019 | 22.79% | 13.97% |
| 2018 | -8.43% | -1.75% |
| 2017 | 13.2% | 5.5% |
| 2016 | 26.49% | 5.3% |
| 2015 | -2.0% | 0.88% |
| 2014 | 5.67% | 7.47% |
| 2013 | 41.36% | -1.8% |
| 2012 | 16.28% | 11.36% |
| 2011 | 0.9% | 7.94% |
| 2010 | 26.14% | 10.65% |
IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% respectively.
The year 2019 was the strongest year for VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $30,759 | 13.97% |
| VCIT | $10,000 | $17,439 | 5.84% |
A $10,000 investment in IJR would have resulted in a final balance of $30,759. This is a profit of $20,759 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.97%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
IJR’s CAGR is 8.13 percentage points higher than that of VCIT and as a result, would have yielded $13,320 more on a $10,000 investment. Thus, IJR outperformed VCIT by 8.13% annually.
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