The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VB and IGSB? And which fund is better?
The expense ratio of VB is 0.01 percentage points lower than IGSB’s (0.05% vs. 0.06%). VB also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, VB has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare VB vs. IGSB. We’ll look at fund composition and risk metrics, as well as at their performance and industry exposure. Moreover, I’ll also discuss VB’s and IGSB’s annual returns, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares 1-5 Year Investment Grade Corporate Bond ETF|
|Category||Small Blend||Short-Term Bond|
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 iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
VB’s dividend yield is 0.88% lower than that of IGSB (1.14% vs. 2.02%). Also, VB yielded on average 11.75% more per year over the past decade (14.25% vs. 2.51%). The expense ratio of VB is 0.01 percentage points lower than IGSB’s (0.05% vs. 0.06%).
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|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
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%.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Sharpe Ratio of 0.74 and a Alpha of -4.02. Its Mean Return is 1.15 while VB’s R-squared is 85.03. Furthermore, the fund has a Standard Deviation of 17.82 and a Treynor Ratio of 10.15.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Standard Deviation of 2 and a R-squared of 26.13. Its Sharpe Ratio is 0.82 while IGSB’s Beta is 0.34. Furthermore, the fund has a Treynor Ratio of 4.82 and a Mean Return of 0.19.
VB’s Mean Return is 0.96 points higher than that of IGSB and its R-squared is 58.90 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than IGSB. The Alpha and Beta of VB are 4.71 points lower and 0.87 points higher than IGSB’s Alpha and Beta.
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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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
VB’s CAGR is 11.75 percentage points higher than that of IGSB and as a result, would have yielded $26,631 more on a $10,000 investment. Thus, VB outperformed IGSB by 11.75% annually.
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