The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and VT is a Vanguard N/A fund. So, what’s the difference between VCIT and VT? And which fund is better?
The expense ratio of VCIT is 0.03 percentage points lower than VT’s (0.05% vs. 0.08%). VCIT is mostly comprised of BBB bonds while VT has a high exposure to the technology sector. Overall, VCIT has provided lower returns than VT over the past ten years.
In this article, we’ll compare VCIT vs. VT. We’ll look at performance and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VCIT’s and VT’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
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Summary
| VCIT | VT | |
| Name | Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares | Vanguard Total World Stock Index Fund ETF Shares |
| Category | Corporate Bond | N/A |
| Issuer | Vanguard | Vanguard |
| AUM | 48.39B | 30.44B |
| Avg. Return | 5.84% | 10.42% |
| Div. Yield | 2.33% | 1.65% |
| Expense Ratio | 0.05% | 0.08% |
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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
VCIT’s dividend yield is 0.68% higher than that of VT (2.33% vs. 1.65%). Also, VCIT yielded on average 4.57% less per year over the past decade (5.84% vs. 10.42%). The expense ratio of VCIT is 0.03 percentage points lower than VT’s (0.05% vs. 0.08%).
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Fund Composition
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.
| VT Holdings | Weight |
| Apple Inc | 2.85% |
| Microsoft Corp | 2.71% |
| Amazon.com Inc | 1.98% |
| Facebook Inc Class A | 1.1% |
| Alphabet Inc Class A | 0.97% |
| Alphabet Inc Class C | 0.95% |
| Tesla Inc | 0.7% |
| NVIDIA Corp | 0.64% |
| JPMorgan Chase & Co | 0.62% |
| Tencent Holdings Ltd | 0.6% |
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
Risk Analysis
| VCIT | VT | |
| Mean Return | 0.44 | 0.9 |
| R-squared | 63.18 | 99.35 |
| Std. Deviation | 5.08 | 14.19 |
| Alpha | 0.89 | 0.2 |
| Beta | 1.35 | 1.01 |
| Sharpe Ratio | 0.91 | 0.71 |
| Treynor Ratio | 3.43 | 9.5 |
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Alpha of 0.89 with a Sharpe Ratio of 0.91 and a Beta of 1.35. Its R-squared is 63.18 while VCIT’s Standard Deviation is 5.08. Furthermore, the fund has a Treynor Ratio of 3.43 and a Mean Return of 0.44.
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Sharpe Ratio of 0.71 with a Standard Deviation of 14.19 and a R-squared of 99.35. Its Treynor Ratio is 9.5 while VT’s Mean Return is 0.9. Furthermore, the fund has a Alpha of 0.2 and a Beta of 1.01.
VCIT’s Mean Return is 0.46 points lower than that of VT and its R-squared is 36.17 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VT. The Alpha and Beta of VCIT are 0.69 points higher and 0.34 points higher than VT’s Alpha and Beta.
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Performance
Annual Returns
| Year | VCIT | VT |
| 2020 | 9.55% | 16.74% |
| 2019 | 13.97% | 26.8% |
| 2018 | -1.75% | -9.67% |
| 2017 | 5.5% | 24.19% |
| 2016 | 5.3% | 8.77% |
| 2015 | 0.88% | -1.88% |
| 2014 | 7.47% | 3.97% |
| 2013 | -1.8% | 22.98% |
| 2012 | 11.36% | 17.33% |
| 2011 | 7.94% | -7.71% |
| 2010 | 10.65% | 13.05% |
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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VCIT | $10,000 | $17,439 | 5.84% |
| VT | $10,000 | $24,537 | 10.42% |
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 VT, the end total would have been $24,537. This equates to a $14,537 profit over 10 years and a compound annual growth rate (CAGR) of 10.42%.
VCIT’s CAGR is 4.57 percentage points lower than that of VT and as a result, would have yielded $7,098 less on a $10,000 investment. Thus, VCIT performed worse than VT by 4.57% annually.
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