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.
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!
|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%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
|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.
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.
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).
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.
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.