IWF vs. VCSH: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between IWF and VCSH? And which fund is better?

The expense ratio of IWF is 0.14 percentage points higher than VCSH’s (0.19% vs. 0.05%). IWF also has a high exposure to the technology sector while VCSH is mostly comprised of BBB bonds. Overall, IWF has provided higher returns than VCSH over the past ten years.

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

Summary

IWF VCSH
Name iShares Russell 1000 Growth ETF Vanguard Short-Term Corporate Bond Index Fund ETF Shares
Category Large Growth Short-Term Bond
Issuer iShares Vanguard
AUM 72.16B 47.88B
Avg. Return 17.72% 3.12%
Div. Yield 0.52% 1.89%
Expense Ratio 0.19% 0.05%

The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.

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%.

IWF’s dividend yield is 1.37% lower than that of VCSH (0.52% vs. 1.89%). Also, IWF yielded on average 14.61% more per year over the past decade (17.72% vs. 3.12%). The expense ratio of IWF is 0.14 percentage points higher than VCSH’s (0.19% vs. 0.05%).

Fund Composition

Holdings

IWF - Holdings

IWF Holdings Weight
Apple Inc 10.51%
Microsoft Corp 9.85%
Amazon.com Inc 6.63%
Facebook Inc Class A 3.91%
Alphabet Inc Class A 3.2%
Alphabet Inc Class C 3.03%
Tesla Inc 2.45%
NVIDIA Corp 2.14%
Visa Inc Class A 1.91%
The Home Depot Inc 1.62%

IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.

Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.

VCSH - Holdings

VCSH Bond Sectors Weight
BBB 47.49%
A 43.06%
AA 8.45%
AAA 0.95%
Below B 0.03%
Others 0.02%
B 0.0%
BB 0.0%
US Government 0.0%

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.

Risk Analysis

IWF VCSH
Mean Return 1.48 0.24
R-squared 92.93 37.53
Std. Deviation 14.42 2.34
Alpha 2.16 0.93
Beta 1.03 0.48
Sharpe Ratio 1.19 0.97
Treynor Ratio 17.1 4.75

The iShares Russell 1000 Growth ETF (IWF) has a Standard Deviation of 14.42 with a Sharpe Ratio of 1.19 and a Beta of 1.03. Its Mean Return is 1.48 while IWF’s Alpha is 2.16. Furthermore, the fund has a R-squared of 92.93 and a Treynor Ratio of 17.1.

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Standard Deviation of 2.34 with a Alpha of 0.93 and a Beta of 0.48. Its R-squared is 37.53 while VCSH’s Sharpe Ratio is 0.97. Furthermore, the fund has a Treynor Ratio of 4.75 and a Mean Return of 0.24.

IWF’s Mean Return is 1.24 points higher than that of VCSH and its R-squared is 55.40 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than VCSH. The Alpha and Beta of IWF are 1.23 points higher and 0.55 points higher than VCSH’s Alpha and Beta.

Performance

Annual Returns

IWF vs. VCSH - Annual Returns

Year IWF VCSH
2020 38.21% 5.08%
2019 36.08% 6.85%
2018 -1.68% 0.91%
2017 29.96% 2.45%
2016 6.92% 2.63%
2015 5.48% 1.25%
2014 12.84% 1.96%
2013 33.19% 1.37%
2012 15.03% 5.74%
2011 2.47% 2.94%
2010 16.47% 5.51%

IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% 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.

Portfolio Growth

IWF vs. VCSH - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $48,012 17.72%
VCSH $10,000 $13,569 3.12%

A $10,000 investment in IWF would have resulted in a final balance of $48,012. This is a profit of $38,012 over 10 years and amounts to a compound annual growth rate (CAGR) of 17.72%.

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%.

IWF’s CAGR is 14.61 percentage points higher than that of VCSH and as a result, would have yielded $34,443 more on a $10,000 investment. Thus, IWF outperformed VCSH by 14.61% annually.


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