The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between VCIT and IXUS? And which fund is better?
The expense ratio of VCIT is 0.04 percentage points lower than IXUS’s (0.05% vs. 0.09%). VCIT is mostly comprised of BBB bonds while IXUS has a high exposure to the financial services sector. Overall, VCIT has provided lower returns than IXUS over the past ten years.
In this article, we’ll compare VCIT vs. IXUS. We’ll look at holdings and annual returns, as well as at their performance and risk metrics. Moreover, I’ll also discuss VCIT’s and IXUS’s fund composition, industry exposure, and portfolio growth 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||iShares Core MSCI Total International Stock ETF|
|Category||Corporate Bond||Foreign Large Blend|
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 iShares Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.
VCIT’s dividend yield is 0.20% higher than that of IXUS (2.33% vs. 2.13%). Also, VCIT yielded on average 0.24% less per year over the past decade (5.84% vs. 6.09%). The expense ratio of VCIT is 0.04 percentage points lower than IXUS’s (0.05% vs. 0.09%).
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.
|Taiwan Semiconductor Manufacturing Co Ltd||1.64%|
|Tencent Holdings Ltd||1.35%|
|Alibaba Group Holding Ltd Ordinary Shares||1.34%|
|Samsung Electronics Co Ltd||1.06%|
|ASML Holding NV||0.9%|
|Roche Holding AG||0.81%|
|LVMH Moet Hennessy Louis Vuitton SE||0.67%|
|Toyota Motor Corp||0.59%|
IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.
ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Standard Deviation of 5.08 with a Beta of 1.35 and a Alpha of 0.89. Its Treynor Ratio is 3.43 while VCIT’s R-squared is 63.18. Furthermore, the fund has a Sharpe Ratio of 0.91 and a Mean Return of 0.44.
The iShares Core MSCI Total International Stock ETF (IXUS) has a Beta of 0 with a Alpha of 0 and a Standard Deviation of 0. Its Treynor Ratio is 0 while IXUS’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.
VCIT’s Mean Return is 0.44 points higher than that of IXUS and its R-squared is 63.18 points higher. With a Standard Deviation of 5.08, VCIT is slightly more volatile than IXUS. The Alpha and Beta of VCIT are 0.89 points higher and 1.35 points higher than IXUS’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 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% 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 IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.
VCIT’s CAGR is 0.24 percentage points lower than that of IXUS and as a result, would have yielded $565 more on a $10,000 investment. Thus, VCIT performed worse than IXUS by 0.24% 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.