VCIT vs. BNDX: What’s The Difference?

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.

Summary

VCIT BNDX
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Vanguard Total International Bond Index Fund ETF Shares
Category Corporate Bond N/A
Issuer Vanguard Vanguard
AUM 48.39B 116.41B
Avg. Return 5.84% 4.63%
Div. Yield 2.33% 0.94%
Expense Ratio 0.05% 0.08%

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%).

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.

BNDX - Holdings

BNDX Bond Sectors Weight
A 29.19%
AA 26.79%
AAA 21.59%
BBB 19.41%
Others 1.57%
Below B 1.45%
B 0.0%
BB 0.0%
US Government 0.0%

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.

Risk Analysis

VCIT BNDX
Mean Return 0.44 0
R-squared 63.18 0
Std. Deviation 5.08 0
Alpha 0.89 0
Beta 1.35 0
Sharpe Ratio 0.91 0
Treynor Ratio 3.43 0

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.

Performance

Annual Returns

VCIT vs. BNDX - Annual Returns

Year VCIT BNDX
2020 9.55% 4.6%
2019 13.97% 7.88%
2018 -1.75% 2.94%
2017 5.5% 2.4%
2016 5.3% 4.67%
2015 0.88% 1.08%
2014 7.47% 8.83%
2013 -1.8% 0.0%
2012 11.36% 0.0%
2011 7.94% 0.0%
2010 10.65% 0.0%

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.

Portfolio Growth

VCIT vs. BNDX - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $14,774 5.84%
BNDX $10,000 $13,695 4.63%

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.


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