VCIT vs. VBR: What’s The Difference?

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

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

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

Summary

VCIT VBR
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Vanguard Small-Cap Value Index Fund ETF Shares
Category Corporate Bond Small Value
Issuer Vanguard Vanguard
AUM 48.39B 48.08B
Avg. Return 5.84% 12.28%
Div. Yield 2.33% 1.6%
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

VCIT’s dividend yield is 0.73% higher than that of VBR (2.33% vs. 1.6%). Also, VCIT yielded on average 6.44% less per year over the past decade (5.84% vs. 12.28%). The expense ratio of VCIT is 0.02 percentage points lower than VBR’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.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

VCIT VBR
Mean Return 0.44 1.08
R-squared 63.18 82.2
Std. Deviation 5.08 18.37
Alpha 0.89 -5.09
Beta 1.35 1.23
Sharpe Ratio 0.91 0.67
Treynor Ratio 3.43 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a R-squared of 82.2 and a Sharpe Ratio of 0.67. Its Beta is 1.23 while VBR’s Alpha is -5.09. Furthermore, the fund has a Mean Return of 1.08 and a Treynor Ratio of 9.15.

VCIT’s Mean Return is 0.64 points lower than that of VBR and its R-squared is 19.02 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VBR. The Alpha and Beta of VCIT are 5.98 points higher and 0.12 points higher than VBR’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. VBR - Annual Returns

Year VCIT VBR
2020 9.55% 5.82%
2019 13.97% 22.76%
2018 -1.75% -12.22%
2017 5.5% 11.79%
2016 5.3% 24.8%
2015 0.88% -4.67%
2014 7.47% 10.55%
2013 -1.8% 36.57%
2012 11.36% 18.78%
2011 7.94% -4.05%
2010 10.65% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

VCIT vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
VBR $10,000 $26,095 12.28%

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 VBR, the end total would have been $26,095. This equates to a $16,095 profit over 10 years and a compound annual growth rate (CAGR) of 12.28%.

VCIT’s CAGR is 6.44 percentage points lower than that of VBR and as a result, would have yielded $8,656 less on a $10,000 investment. Thus, VCIT performed worse than VBR by 6.44% annually.


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