The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Vanguard Large-Cap Index Fund ETF Shares (VV) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and VV is a Vanguard Large Blend fund. So, what’s the difference between VCIT and VV? And which fund is better?
The expense ratio of VCIT is 0.01 percentage points higher than VV’s (0.05% vs. 0.04%). VCIT is mostly comprised of BBB bonds while VV has a high exposure to the technology sector. Overall, VCIT has provided lower returns than VV over the past ten years.
In this article, we’ll compare VCIT vs. VV. We’ll look at holdings and performance, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VCIT’s and VV’s industry exposure, risk metrics, and annual returns and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||Vanguard Large-Cap Index Fund ETF Shares|
|Category||Corporate Bond||Large Blend|
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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.
VCIT’s dividend yield is 1.07% higher than that of VV (2.33% vs. 1.26%). Also, VCIT yielded on average 8.90% less per year over the past decade (5.84% vs. 14.75%). The expense ratio of VCIT is 0.01 percentage points higher than VV’s (0.05% vs. 0.04%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
|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.
|Facebook Inc Class A||2.19%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.81%|
|Berkshire Hathaway Inc Class B||1.3%|
|JPMorgan Chase & Co||1.24%|
VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.
Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Standard Deviation of 5.08 with a R-squared of 63.18 and a Mean Return of 0.44. Its Beta is 1.35 while VCIT’s Alpha is 0.89. Furthermore, the fund has a Treynor Ratio of 3.43 and a Sharpe Ratio of 0.91.
The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Alpha of -0.08 with a R-squared of 99.86 and a Beta of 1.01. Its Mean Return is 1.24 while VV’s Treynor Ratio is 14.14. Furthermore, the fund has a Standard Deviation of 13.75 and a Sharpe Ratio of 1.04.
VCIT’s Mean Return is 0.80 points lower than that of VV and its R-squared is 36.68 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VV. The Alpha and Beta of VCIT are 0.97 points higher and 0.34 points higher than VV’s Alpha and Beta.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% 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 VV, the end total would have been $37,103. This equates to a $27,103 profit over 10 years and a compound annual growth rate (CAGR) of 14.75%.
VCIT’s CAGR is 8.90 percentage points lower than that of VV and as a result, would have yielded $19,664 less on a $10,000 investment. Thus, VCIT performed worse than VV by 8.90% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.