The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between VCIT and VCSH? And which fund is better?
VCIT and VCSH have the same expense ratio: 0.05%. VCIT is mostly comprised of BBB bonds and VCSH has a high exposure to BBB bond. Overall, VCIT has provided higher returns than VCSH over the past ten years.
In this article, we’ll compare VCIT vs. VCSH. We’ll look at performance and annual returns, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VCIT’s and VCSH’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||Vanguard Short-Term Corporate 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 Corporate Bond Index Fund ETF Shares (VCSH) is a Short-Term Bond fund that is issued by Vanguard. It currently has 47.88B total assets under management and has yielded an average annual return of 3.12% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.05%.
VCIT’s dividend yield is 0.44% higher than that of VCSH (2.33% vs. 1.89%). Also, VCIT yielded on average 2.72% more per year over the past decade (5.84% vs. 3.12%). VCIT and VCSH have the same expense ratio: 0.05%.
|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.
|VCSH Bond Sectors||Weight|
VCSH’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 47.49%, 43.06%, 8.45%, 0.95%, and 0.03%. The fund is less weighted towards Others (0.02%), B (0.0%), and BB (0.0%) rated bonds.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Mean Return of 0.44 with a Beta of 1.35 and a Standard Deviation of 5.08. Its Treynor Ratio is 3.43 while VCIT’s Alpha is 0.89. Furthermore, the fund has a R-squared of 63.18 and a Sharpe Ratio of 0.91.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Alpha of 0.93 with a Mean Return of 0.24 and a Sharpe Ratio of 0.97. Its Treynor Ratio is 4.75 while VCSH’s Standard Deviation is 2.34. Furthermore, the fund has a R-squared of 37.53 and a Beta of 0.48.
VCIT’s Mean Return is 0.20 points higher than that of VCSH and its R-squared is 25.65 points higher. With a Standard Deviation of 5.08, VCIT is slightly more volatile than VCSH. The Alpha and Beta of VCIT are 0.04 points lower and 0.87 points higher than VCSH’s Alpha and Beta.
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 VCSH, returning 6.85% on an annual basis. The poorest year for VCSH in the last ten years was 2018, with a yield of 0.91%. Most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2016, and 2011, when gains were 2.45%, 2.63%, and 2.94% 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 VCSH, the end total would have been $13,569. This equates to a $3,569 profit over 10 years and a compound annual growth rate (CAGR) of 3.12%.
VCIT’s CAGR is 2.72 percentage points higher than that of VCSH and as a result, would have yielded $3,870 more on a $10,000 investment. Thus, VCIT outperformed VCSH by 2.72% annually.
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