The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between VB and BSV? And which fund is better?
VB and BSV have the same expense ratio: 0.05%. VB also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, VB has provided higher returns than BSV over the past ten years.
In this article, we’ll compare VB vs. BSV. We’ll look at risk metrics and fund composition, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss VB’s and BSV’s performance, annual returns, and holdings and examine how these affect their overall returns.
Summary
| VB | BSV | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Vanguard Short-Term Bond Index Fund ETF Shares |
| Category | Small Blend | Short-Term Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 137.72B | 67.71B |
| Avg. Return | 14.25% | 2.27% |
| Div. Yield | 1.14% | 1.48% |
| Expense Ratio | 0.05% | 0.05% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
VB’s dividend yield is 0.34% lower than that of BSV (1.14% vs. 1.48%). Also, VB yielded on average 11.98% more per year over the past decade (14.25% vs. 2.27%). VB and BSV have the same expense ratio: 0.05%.
Fund Composition
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| VB | BSV | |
| Mean Return | 1.15 | 0.16 |
| R-squared | 85.03 | 78.38 |
| Std. Deviation | 17.82 | 1.33 |
| Alpha | -4.02 | 0.21 |
| Beta | 1.21 | 0.38 |
| Sharpe Ratio | 0.74 | 0.98 |
| Treynor Ratio | 10.15 | 3.33 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Sharpe Ratio of 0.74 and a Alpha of -4.02. Its Beta is 1.21 while VB’s Mean Return is 1.15. Furthermore, the fund has a Treynor Ratio of 10.15 and a R-squared of 85.03.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a R-squared of 78.38 with a Alpha of 0.21 and a Treynor Ratio of 3.33. Its Sharpe Ratio is 0.98 while BSV’s Standard Deviation is 1.33. Furthermore, the fund has a Mean Return of 0.16 and a Beta of 0.38.
VB’s Mean Return is 0.99 points higher than that of BSV and its R-squared is 6.65 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than BSV. The Alpha and Beta of VB are 4.23 points lower and 0.83 points higher than BSV’s Alpha and Beta.
Performance
Annual Returns
| Year | VB | BSV |
| 2020 | 19.08% | 4.67% |
| 2019 | 27.37% | 4.92% |
| 2018 | -9.3% | 1.34% |
| 2017 | 16.24% | 1.2% |
| 2016 | 18.31% | 1.42% |
| 2015 | -3.65% | 0.92% |
| 2014 | 7.51% | 1.32% |
| 2013 | 37.8% | 0.17% |
| 2012 | 18.22% | 1.98% |
| 2011 | -2.68% | 3.04% |
| 2010 | 27.89% | 4.0% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| BSV | $10,000 | $12,785 | 2.27% |
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
VB’s CAGR is 11.98 percentage points higher than that of BSV and as a result, would have yielded $26,949 more on a $10,000 investment. Thus, VB outperformed BSV by 11.98% annually.
Current recommendations:
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.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
