VCSH vs. BIV: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VCSH and BIV? And which fund is better?

VCSH and BIV have the same expense ratio: 0.05%. VCSH is mostly comprised of BBB bonds and BIV has a high exposure to AAA bond. Overall, VCSH has provided lower returns than BIV over the past ten years.

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

Summary

VCSH BIV
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Short-Term Bond Intermediate-Term Bond
Issuer Vanguard Vanguard
AUM 47.88B 39.05B
Avg. Return 3.12% 5.31%
Div. Yield 1.89% 2.06%
Expense Ratio 0.05% 0.05%

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 Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

VCSH’s dividend yield is 0.17% lower than that of BIV (1.89% vs. 2.06%). Also, VCSH yielded on average 2.20% less per year over the past decade (3.12% vs. 5.31%). VCSH and BIV have the same expense ratio: 0.05%.

Fund Composition

Holdings

VCSH - Holdings

VCSH Bond Sectors Weight
BBB 47.49%
A 43.06%
AA 8.45%
AAA 0.95%
Below B 0.03%
Others 0.02%
B 0.0%
BB 0.0%
US Government 0.0%

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.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

VCSH BIV
Mean Return 0.24 0.35
R-squared 37.53 95.12
Std. Deviation 2.34 4.09
Alpha 0.93 -0.07
Beta 0.48 1.33
Sharpe Ratio 0.97 0.89
Treynor Ratio 4.75 2.72

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Alpha of 0.93 with a Treynor Ratio of 4.75 and a Beta of 0.48. Its Standard Deviation is 2.34 while VCSH’s R-squared is 37.53. Furthermore, the fund has a Mean Return of 0.24 and a Sharpe Ratio of 0.97.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Beta of 1.33 with a Standard Deviation of 4.09 and a Sharpe Ratio of 0.89. Its R-squared is 95.12 while BIV’s Mean Return is 0.35. Furthermore, the fund has a Treynor Ratio of 2.72 and a Alpha of -0.07.

VCSH’s Mean Return is 0.11 points lower than that of BIV and its R-squared is 57.59 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than BIV. The Alpha and Beta of VCSH are 1.00 points higher and 0.85 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. BIV - Annual Returns

Year VCSH BIV
2020 5.08% 9.71%
2019 6.85% 10.19%
2018 0.91% -0.09%
2017 2.45% 3.8%
2016 2.63% 2.86%
2015 1.25% 1.23%
2014 1.96% 7.0%
2013 1.37% -3.44%
2012 5.74% 7.02%
2011 2.94% 10.62%
2010 5.51% 9.55%

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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

VCSH vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
BIV $10,000 $15,967 5.31%

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 BIV, the end total would have been $15,967. This equates to a $5,967 profit over 10 years and a compound annual growth rate (CAGR) of 5.31%.

VCSH’s CAGR is 2.20 percentage points lower than that of BIV and as a result, would have yielded $2,398 less on a $10,000 investment. Thus, VCSH performed worse than BIV by 2.20% annually.


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