VCIT vs. VXF: What’s The Difference?

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

The expense ratio of VCIT is 0.01 percentage points lower than VXF’s (0.05% vs. 0.06%). VCIT is mostly comprised of BBB bonds while VXF has a high exposure to the technology sector. Overall, VCIT has provided lower returns than VXF over the past ten years.

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

Summary

VCIT VXF
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Vanguard Extended Market Index Fund ETF Shares
Category Corporate Bond Mid-Cap Growth
Issuer Vanguard Vanguard
AUM 48.39B 114.53B
Avg. Return 5.84% 15.47%
Div. Yield 2.33% 1.19%
Expense Ratio 0.05% 0.06%

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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

VCIT’s dividend yield is 1.14% higher than that of VXF (2.33% vs. 1.19%). Also, VCIT yielded on average 9.63% less per year over the past decade (5.84% vs. 15.47%). The expense ratio of VCIT is 0.01 percentage points lower than VXF’s (0.05% vs. 0.06%).

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.

VXF - Holdings

VXF Holdings Weight
Square Inc A 1.2%
Zoom Video Communications Inc 1.04%
Uber Technologies Inc 0.93%
Moderna Inc 0.9%
Blackstone Group Inc 0.83%
Snap Inc Class A 0.8%
Twilio Inc A 0.73%
DocuSign Inc 0.68%
CrowdStrike Holdings Inc Class A 0.63%
Marvell Technology Inc 0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

Risk Analysis

VCIT VXF
Mean Return 0.44 1.24
R-squared 63.18 85.73
Std. Deviation 5.08 18.04
Alpha 0.89 -3.26
Beta 1.35 1.23
Sharpe Ratio 0.91 0.79
Treynor Ratio 3.43 10.92

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

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Beta of 1.23 with a R-squared of 85.73 and a Treynor Ratio of 10.92. Its Standard Deviation is 18.04 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Mean Return of 1.24 and a Alpha of -3.26.

VCIT’s Mean Return is 0.80 points lower than that of VXF and its R-squared is 22.55 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VXF. The Alpha and Beta of VCIT are 4.15 points higher and 0.12 points higher than VXF’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. VXF - Annual Returns

Year VCIT VXF
2020 9.55% 32.19%
2019 13.97% 28.04%
2018 -1.75% -9.37%
2017 5.5% 18.1%
2016 5.3% 16.16%
2015 0.88% -3.26%
2014 7.47% 7.55%
2013 -1.8% 38.37%
2012 11.36% 18.48%
2011 7.94% -3.61%
2010 10.65% 27.55%

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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

VCIT vs. VXF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
VXF $10,000 $34,598 15.47%

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 VXF, the end total would have been $34,598. This equates to a $24,598 profit over 10 years and a compound annual growth rate (CAGR) of 15.47%.

VCIT’s CAGR is 9.63 percentage points lower than that of VXF and as a result, would have yielded $17,159 less on a $10,000 investment. Thus, VCIT performed worse than VXF by 9.63% annually.


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