The iShares 1-3 Year Treasury Bond ETF (SHY) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between SHY and VXF? And which fund is better?
The expense ratio of SHY is 0.09 percentage points higher than VXF’s (0.15% vs. 0.06%). SHY is mostly comprised of AAA bonds while VXF has a high exposure to the technology sector. Overall, SHY has provided lower returns than VXF over the past 11 years.
In this article, we’ll compare SHY vs. VXF. We’ll look at industry exposure and holdings, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss SHY’s and VXF’s risk metrics, performance, and fund composition and examine how these affect their overall returns.
Summary
| SHY | VXF | |
| Name | iShares 1-3 Year Treasury Bond ETF | Vanguard Extended Market Index Fund ETF Shares |
| Category | Short Government | Mid-Cap Growth |
| Issuer | iShares | Vanguard |
| AUM | 19.51B | 114.53B |
| Avg. Return | 1.27% | 15.47% |
| Div. Yield | 0.46% | 1.19% |
| Expense Ratio | 0.15% | 0.06% |
The iShares 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
SHY’s dividend yield is 0.73% lower than that of VXF (0.46% vs. 1.19%). Also, SHY yielded on average 14.20% less per year over the past decade (1.27% vs. 15.47%). The expense ratio of SHY is 0.09 percentage points higher than VXF’s (0.15% vs. 0.06%).
Fund Composition
Holdings
| SHY Bond Sectors | Weight |
| AAA | 99.67% |
| Others | 0.33% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| SHY | VXF | |
| Mean Return | 0.09 | 1.24 |
| R-squared | 39.11 | 85.73 |
| Std. Deviation | 0.89 | 18.04 |
| Alpha | -0.03 | -3.26 |
| Beta | 0.18 | 1.23 |
| Sharpe Ratio | 0.54 | 0.79 |
| Treynor Ratio | 2.6 | 10.92 |
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Alpha of -0.03 with a Standard Deviation of 0.89 and a Sharpe Ratio of 0.54. Its Treynor Ratio is 2.6 while SHY’s Mean Return is 0.09. Furthermore, the fund has a Beta of 0.18 and a R-squared of 39.11.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Standard Deviation of 18.04 with a Mean Return of 1.24 and a Alpha of -3.26. Its Beta is 1.23 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Treynor Ratio of 10.92 and a R-squared of 85.73.
SHY’s Mean Return is 1.15 points lower than that of VXF and its R-squared is 46.62 points lower. With a Standard Deviation of 0.89, SHY is slightly less volatile than VXF. The Alpha and Beta of SHY are 3.23 points higher and 1.05 points lower than VXF’s Alpha and Beta.
Performance
Annual Returns
| Year | SHY | VXF |
| 2020 | 3.01% | 32.19% |
| 2019 | 3.42% | 28.04% |
| 2018 | 1.45% | -9.37% |
| 2017 | 0.27% | 18.1% |
| 2016 | 0.75% | 16.16% |
| 2015 | 0.43% | -3.26% |
| 2014 | 0.48% | 7.55% |
| 2013 | 0.23% | 38.37% |
| 2012 | 0.31% | 18.48% |
| 2011 | 1.43% | -3.61% |
| 2010 | 2.23% | 27.55% |
SHY had its best year in 2019 with an annual return of 3.42%. SHY’s worst year over the past decade yielded 0.23% and occurred in 2013. In most years the iShares 1-3 Year Treasury Bond ETF provided moderate returns such as in 2014, 2016, and 2011 where annual returns amounted to 0.48%, 0.75%, and 1.43% respectively.
The year 2013 was the strongest year for VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SHY | $10,000 | $11,486 | 1.27% |
| VXF | $10,000 | $44,130 | 15.47% |
A $10,000 investment in SHY would have resulted in a final balance of $11,486. This is a profit of $1,486 over 11 years and amounts to a compound annual growth rate (CAGR) of 1.27%.
With a $10,000 investment in VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
SHY’s CAGR is 14.20 percentage points lower than that of VXF and as a result, would have yielded $32,644 less on a $10,000 investment. Thus, SHY performed worse than VXF by 14.20% annually.
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