The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and ACWI is a iShares N/A fund. So, what’s the difference between VCSH and ACWI? And which fund is better?
The expense ratio of VCSH is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%). VCSH is mostly comprised of BBB bonds while ACWI has a high exposure to the technology sector. Overall, VCSH has provided lower returns than ACWI over the past ten years.
In this article, we’ll compare VCSH vs. ACWI. We’ll look at industry exposure and holdings, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VCSH’s and ACWI’s fund composition, risk metrics, and performance and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares MSCI ACWI ETF|
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%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
VCSH’s dividend yield is 0.50% higher than that of ACWI (1.89% vs. 1.39%). Also, VCSH yielded on average 7.10% less per year over the past decade (3.12% vs. 10.21%). The expense ratio of VCSH is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%).
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|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.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
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The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Sharpe Ratio of 0.97 with a Alpha of 0.93 and a Standard Deviation of 2.34. Its Mean Return is 0.24 while VCSH’s R-squared is 37.53. Furthermore, the fund has a Treynor Ratio of 4.75 and a Beta of 0.48.
The iShares MSCI ACWI ETF (ACWI) has a R-squared of 99.96 with a Standard Deviation of 14.05 and a Alpha of 0.15. Its Sharpe Ratio is 0.71 while ACWI’s Beta is 1. Furthermore, the fund has a Treynor Ratio of 9.45 and a Mean Return of 0.89.
VCSH’s Mean Return is 0.65 points lower than that of ACWI and its R-squared is 62.43 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than ACWI. The Alpha and Beta of VCSH are 0.78 points higher and 0.52 points lower than ACWI’s Alpha and Beta.
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VCSH had its best year in 2019 with an annual return of 6.85%. VCSH’s worst year over the past decade yielded 0.91% and occurred in 2018. In most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 2.45%, 2.63%, and 2.94% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VCSH would have resulted in a final balance of $13,569. This is a profit of $3,569 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.12%.
With a $10,000 investment in ACWI, the end total would have been $24,255. This equates to a $14,255 profit over 10 years and a compound annual growth rate (CAGR) of 10.21%.
VCSH’s CAGR is 7.10 percentage points lower than that of ACWI and as a result, would have yielded $10,686 less on a $10,000 investment. Thus, VCSH performed worse than ACWI by 7.10% annually.
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