VCIT vs. BIV: What’s The Difference?

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VCIT and BIV? And which fund is better?

VCIT and BIV have the same expense ratio: 0.05%. VCIT is mostly comprised of BBB bonds and BIV has a high exposure to AAA bond. Overall, VCIT has provided higher returns than BIV over the past ten years.

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

Summary

VCIT BIV
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Corporate Bond Intermediate-Term Bond
Issuer Vanguard Vanguard
AUM 48.39B 39.05B
Avg. Return 5.84% 5.31%
Div. Yield 2.33% 2.06%
Expense Ratio 0.05% 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%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

VCIT’s dividend yield is 0.27% higher than that of BIV (2.33% vs. 2.06%). Also, VCIT yielded on average 0.53% more per year over the past decade (5.84% vs. 5.31%). VCIT and BIV have the same expense ratio: 0.05%.

Fund Composition

Holdings

VCIT - Holdings

VCIT Bond Sectors Weight
BBB 55.28%
A 37.85%
AA 5.22%
AAA 1.57%
Below B 0.08%
Others 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

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.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

VCIT BIV
Mean Return 0.44 0.35
R-squared 63.18 95.12
Std. Deviation 5.08 4.09
Alpha 0.89 -0.07
Beta 1.35 1.33
Sharpe Ratio 0.91 0.89
Treynor Ratio 3.43 2.72

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Treynor Ratio of 3.43 with a R-squared of 63.18 and a Mean Return of 0.44. Its Sharpe Ratio is 0.91 while VCIT’s Beta is 1.35. Furthermore, the fund has a Alpha of 0.89 and a Standard Deviation of 5.08.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Treynor Ratio of 2.72 with a R-squared of 95.12 and a Mean Return of 0.35. Its Standard Deviation is 4.09 while BIV’s Alpha is -0.07. Furthermore, the fund has a Beta of 1.33 and a Sharpe Ratio of 0.89.

VCIT’s Mean Return is 0.09 points higher than that of BIV and its R-squared is 31.94 points lower. With a Standard Deviation of 5.08, VCIT is slightly more volatile than BIV. The Alpha and Beta of VCIT are 0.96 points higher and 0.02 points higher than BIV’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. BIV - Annual Returns

Year VCIT BIV
2020 9.55% 9.71%
2019 13.97% 10.19%
2018 -1.75% -0.09%
2017 5.5% 3.8%
2016 5.3% 2.86%
2015 0.88% 1.23%
2014 7.47% 7.0%
2013 -1.8% -3.44%
2012 11.36% 7.02%
2011 7.94% 10.62%
2010 10.65% 9.55%

VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

VCIT vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
BIV $10,000 $15,967 5.31%

A $10,000 investment in VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

With a $10,000 investment in BIV, the end total would have been $15,967. This equates to a $5,967 profit over 10 years and a compound annual growth rate (CAGR) of 5.31%.

VCIT’s CAGR is 0.53 percentage points higher than that of BIV and as a result, would have yielded $1,472 more on a $10,000 investment. Thus, VCIT outperformed BIV by 0.53% annually.


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