The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and VHT is a Vanguard Health fund. So, what’s the difference between VCIT and VHT? And which fund is better?
The expense ratio of VCIT is 0.05 percentage points lower than VHT’s (0.05% vs. 0.1%). VCIT is mostly comprised of BBB bonds while VHT has a high exposure to the healthcare sector. Overall, VCIT has provided lower returns than VHT over the past ten years.
In this article, we’ll compare VCIT vs. VHT. We’ll look at performance and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VCIT’s and VHT’s risk metrics, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||Vanguard Health Care Index Fund ETF Shares|
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
VCIT’s dividend yield is 1.18% higher than that of VHT (2.33% vs. 1.15%). Also, VCIT yielded on average 10.20% less per year over the past decade (5.84% vs. 16.04%). The expense ratio of VCIT is 0.05 percentage points lower than VHT’s (0.05% vs. 0.1%).
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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.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Sharpe Ratio of 0.91 with a Alpha of 0.89 and a Standard Deviation of 5.08. Its Beta is 1.35 while VCIT’s Treynor Ratio is 3.43. Furthermore, the fund has a R-squared of 63.18 and a Mean Return of 0.44.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Treynor Ratio of 20.74 with a R-squared of 59.86 and a Sharpe Ratio of 1.13. Its Beta is 0.75 while VHT’s Alpha is 7.99. Furthermore, the fund has a Mean Return of 1.33 and a Standard Deviation of 13.58.
VCIT’s Mean Return is 0.89 points lower than that of VHT and its R-squared is 3.32 points higher. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VHT. The Alpha and Beta of VCIT are 7.10 points lower and 0.60 points higher than VHT’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 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% 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 VHT, the end total would have been $45,829. This equates to a $35,829 profit over 10 years and a compound annual growth rate (CAGR) of 16.04%.
VCIT’s CAGR is 10.20 percentage points lower than that of VHT and as a result, would have yielded $28,390 less on a $10,000 investment. Thus, VCIT performed worse than VHT by 10.20% annually.
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