The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between VCIT and BSV? And which fund is better?
VCIT and BSV have the same expense ratio: 0.05%. VCIT is mostly comprised of BBB bonds and BSV has a high exposure to AAA bond. Overall, VCIT has provided higher returns than BSV over the past ten years.
In this article, we’ll compare VCIT vs. BSV. We’ll look at risk metrics and portfolio growth, as well as at their fund composition and holdings. Moreover, I’ll also discuss VCIT’s and BSV’s performance, industry exposure, and annual returns and examine how these affect their overall returns.
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|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||Vanguard Short-Term Bond Index Fund ETF Shares|
|Category||Corporate Bond||Short-Term Bond|
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 Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
VCIT’s dividend yield is 0.85% higher than that of BSV (2.33% vs. 1.48%). Also, VCIT yielded on average 3.57% more per year over the past decade (5.84% vs. 2.27%). VCIT and BSV have the same expense ratio: 0.05%.
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|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.
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a R-squared of 63.18 with a Sharpe Ratio of 0.91 and a Alpha of 0.89. Its Mean Return is 0.44 while VCIT’s Standard Deviation is 5.08. Furthermore, the fund has a Beta of 1.35 and a Treynor Ratio of 3.43.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Mean Return of 0.16 with a Standard Deviation of 1.33 and a Treynor Ratio of 3.33. Its Sharpe Ratio is 0.98 while BSV’s Alpha is 0.21. Furthermore, the fund has a Beta of 0.38 and a R-squared of 78.38.
VCIT’s Mean Return is 0.28 points higher than that of BSV and its R-squared is 15.20 points lower. With a Standard Deviation of 5.08, VCIT is slightly more volatile than BSV. The Alpha and Beta of VCIT are 0.68 points higher and 0.97 points higher than BSV’s Alpha and Beta.
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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 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 BSV, the end total would have been $12,294. This equates to a $2,294 profit over 10 years and a compound annual growth rate (CAGR) of 2.27%.
VCIT’s CAGR is 3.57 percentage points higher than that of BSV and as a result, would have yielded $5,145 more on a $10,000 investment. Thus, VCIT outperformed BSV by 3.57% annually.
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