The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Total International Bond Index Fund ETF Shares (BNDX) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and BNDX is a Vanguard N/A fund. So, what’s the difference between VCIT and BNDX? And which fund is better?
The expense ratio of VCIT is 0.03 percentage points lower than BNDX’s (0.05% vs. 0.08%). VCIT is mostly comprised of BBB bonds and BNDX has a high exposure to A bond. Overall, VCIT has provided higher returns than BNDX over the past ten years.
In this article, we’ll compare VCIT vs. BNDX. We’ll look at risk metrics and fund composition, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VCIT’s and BNDX’s industry exposure, annual returns, and performance and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||Vanguard Total International Bond Index Fund ETF Shares|
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 Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.
VCIT’s dividend yield is 1.39% higher than that of BNDX (2.33% vs. 0.94%). Also, VCIT yielded on average 1.21% more per year over the past decade (5.84% vs. 4.63%). The expense ratio of VCIT is 0.03 percentage points lower than BNDX’s (0.05% vs. 0.08%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
|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.
|BNDX Bond Sectors||Weight|
BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Sharpe Ratio of 0.91 with a Alpha of 0.89 and a R-squared of 63.18. Its Mean Return is 0.44 while VCIT’s Treynor Ratio is 3.43. Furthermore, the fund has a Beta of 1.35 and a Standard Deviation of 5.08.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Treynor Ratio is 0 while BNDX’s Alpha is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.
VCIT’s Mean Return is 0.44 points higher than that of BNDX and its R-squared is 63.18 points higher. With a Standard Deviation of 5.08, VCIT is slightly more volatile than BNDX. The Alpha and Beta of VCIT are 0.89 points higher and 1.35 points higher than BNDX’s Alpha and Beta.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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 2014 was the strongest year for BNDX, returning 8.83% on an annual basis. The poorest year for BNDX in the last ten years was 2013, with a yield of 0.0%. Most years the Vanguard Total International Bond Index Fund ETF Shares has given investors modest returns, such as in 2015, 2017, and 2018, when gains were 1.08%, 2.4%, and 2.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VCIT would have resulted in a final balance of $14,774. This is a profit of $4,774 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.84%.
With a $10,000 investment in BNDX, the end total would have been $13,695. This equates to a $3,695 profit over 7 years and a compound annual growth rate (CAGR) of 4.63%.
VCIT’s CAGR is 1.21 percentage points higher than that of BNDX and as a result, would have yielded $1,079 more on a $10,000 investment. Thus, VCIT outperformed BNDX by 1.21% annually.
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.