VCIT vs. VBK: What’s The Difference?

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

The expense ratio of VCIT is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%). VCIT is mostly comprised of BBB bonds while VBK has a high exposure to the technology sector. Overall, VCIT has provided lower returns than VBK over the past ten years.

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

Summary

VCIT VBK
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Vanguard Small-Cap Growth Index Fund ETF Shares
Category Corporate Bond Small Growth
Issuer Vanguard Vanguard
AUM 48.39B 37.89B
Avg. Return 5.84% 16.53%
Div. Yield 2.33% 0.45%
Expense Ratio 0.05% 0.07%

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 Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

VCIT’s dividend yield is 1.88% higher than that of VBK (2.33% vs. 0.45%). Also, VCIT yielded on average 10.69% less per year over the past decade (5.84% vs. 16.53%). The expense ratio of VCIT is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%).

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.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

Risk Analysis

VCIT VBK
Mean Return 0.44 1.22
R-squared 63.18 80.56
Std. Deviation 5.08 17.95
Alpha 0.89 -2.81
Beta 1.35 1.18
Sharpe Ratio 0.91 0.78
Treynor Ratio 3.43 11.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Treynor Ratio of 11.18 and a Alpha of -2.81. Its Mean Return is 1.22 while VBK’s Standard Deviation is 17.95. Furthermore, the fund has a Sharpe Ratio of 0.78 and a R-squared of 80.56.

VCIT’s Mean Return is 0.78 points lower than that of VBK and its R-squared is 17.38 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VBK. The Alpha and Beta of VCIT are 3.70 points higher and 0.17 points higher than VBK’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. VBK - Annual Returns

Year VCIT VBK
2020 9.55% 35.29%
2019 13.97% 32.75%
2018 -1.75% -5.68%
2017 5.5% 21.9%
2016 5.3% 10.74%
2015 0.88% -2.51%
2014 7.47% 4.02%
2013 -1.8% 38.18%
2012 11.36% 17.67%
2011 7.94% -1.43%
2010 10.65% 30.87%

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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

VCIT vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
VBK $10,000 $37,165 16.53%

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 VBK, the end total would have been $37,165. This equates to a $27,165 profit over 10 years and a compound annual growth rate (CAGR) of 16.53%.

VCIT’s CAGR is 10.69 percentage points lower than that of VBK and as a result, would have yielded $19,726 less on a $10,000 investment. Thus, VCIT performed worse than VBK by 10.69% annually.


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