The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between VB and VCIT? And which fund is better?
VB and VCIT have the same expense ratio: 0.05%. VB also has a high exposure to the technology sector while VCIT is mostly comprised of BBB bonds. Overall, VB has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare VB vs. VCIT. We’ll look at risk metrics and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VB’s and VCIT’s industry exposure, fund composition, and performance and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares|
|Category||Small Blend||Corporate 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 Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
VB’s dividend yield is 1.19% lower than that of VCIT (1.14% vs. 2.33%). Also, VB yielded on average 8.41% more per year over the past decade (14.25% vs. 5.84%). VB and VCIT have the same expense ratio: 0.05%.
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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%.
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a Alpha of -4.02 and a Treynor Ratio of 10.15. Its Standard Deviation is 17.82 while VB’s R-squared is 85.03. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Beta of 1.21.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a R-squared of 63.18 with a Beta of 1.35 and a Sharpe Ratio of 0.91. Its Standard Deviation is 5.08 while VCIT’s Mean Return is 0.44. Furthermore, the fund has a Treynor Ratio of 3.43 and a Alpha of 0.89.
VB’s Mean Return is 0.71 points higher than that of VCIT and its R-squared is 21.85 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than VCIT. The Alpha and Beta of VB are 4.91 points lower and 0.14 points lower than VCIT’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 VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $31,069. This is a profit of $21,069 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
VB’s CAGR is 8.41 percentage points higher than that of VCIT and as a result, would have yielded $13,630 more on a $10,000 investment. Thus, VB outperformed VCIT by 8.41% annually.
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