The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between IJR and VCSH? And which fund is better?
The expense ratio of IJR is 0.01 percentage points higher than VCSH’s (0.06% vs. 0.05%). IJR also has a high exposure to the industrials sector while VCSH is mostly comprised of BBB bonds. Overall, IJR has provided higher returns than VCSH over the past ten years.
In this article, we’ll compare IJR vs. VCSH. We’ll look at fund composition and portfolio growth, as well as at their annual returns and performance. Moreover, I’ll also discuss IJR’s and VCSH’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core S&P Small-Cap ETF||Vanguard Short-Term Corporate Bond Index Fund ETF Shares|
|Category||Small Blend||Short-Term Bond|
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 Short-Term Corporate Bond Index Fund ETF Shares (VCSH) is a Short-Term Bond fund that is issued by Vanguard. It currently has 47.88B total assets under management and has yielded an average annual return of 3.12% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.05%.
IJR’s dividend yield is 0.93% lower than that of VCSH (0.96% vs. 1.89%). Also, IJR yielded on average 10.85% more per year over the past decade (13.97% vs. 3.12%). The expense ratio of IJR is 0.01 percentage points higher than VCSH’s (0.06% vs. 0.05%).
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|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
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%.
|VCSH Bond Sectors||Weight|
VCSH’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 47.49%, 43.06%, 8.45%, 0.95%, and 0.03%. The fund is less weighted towards Others (0.02%), B (0.0%), and BB (0.0%) rated bonds.
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The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a Standard Deviation of 18.68 and a Beta of 1.2. Its Treynor Ratio is 10.77 while IJR’s Alpha is -3.7. Furthermore, the fund has a R-squared of 76.03 and a Mean Return of 1.21.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Beta of 0.48 with a R-squared of 37.53 and a Treynor Ratio of 4.75. Its Alpha is 0.93 while VCSH’s Sharpe Ratio is 0.97. Furthermore, the fund has a Mean Return of 0.24 and a Standard Deviation of 2.34.
IJR’s Mean Return is 0.97 points higher than that of VCSH and its R-squared is 38.50 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than VCSH. The Alpha and Beta of IJR are 4.63 points lower and 0.72 points higher than VCSH’s Alpha and Beta.
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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 VCSH, returning 6.85% on an annual basis. The poorest year for VCSH in the last ten years was 2018, with a yield of 0.91%. Most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2016, and 2011, when gains were 2.45%, 2.63%, and 2.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VCSH, the end total would have been $13,569. This equates to a $3,569 profit over 10 years and a compound annual growth rate (CAGR) of 3.12%.
IJR’s CAGR is 10.85 percentage points higher than that of VCSH and as a result, would have yielded $17,190 more on a $10,000 investment. Thus, IJR outperformed VCSH by 10.85% annually.
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