The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VCSH and DFAC? And which fund is better?
The expense ratio of VCSH is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%). VCSH is mostly comprised of BBB bonds while DFAC has a high exposure to the technology sector. Overall, VCSH has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare VCSH vs. DFAC. We’ll look at performance and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss VCSH’s and DFAC’s portfolio growth, annual returns, and risk metrics and examine how these affect their overall returns.
Summary
| VCSH | DFAC | |
| Name | Vanguard Short-Term Corporate Bond Index Fund ETF Shares | Dimensional U.S. Core Equity 2 ETF |
| Category | Short-Term Bond | Large Blend |
| Issuer | Vanguard | Dimensional Fund Advisors |
| AUM | 47.88B | 13.53B |
| Avg. Return | 3.12% | 13.93% |
| Div. Yield | 1.89% | 1.0% |
| Expense Ratio | 0.05% | 0.19% |
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 Dimensional U.S. Core Equity 2 ETF (DFAC) is a Large Blend fund that is issued by Dimensional Fund Advisors. It currently has 13.53B total assets under management and has yielded an average annual return of 13.93% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.19%.
VCSH’s dividend yield is 0.89% higher than that of DFAC (1.89% vs. 1.0%). Also, VCSH yielded on average 10.81% less per year over the past decade (3.12% vs. 13.93%). The expense ratio of VCSH is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%).
Fund Composition
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.
| DFAC Holdings | Weight |
| Apple Inc | 4.7% |
| Microsoft Corp | 3.81% |
| Amazon.com Inc | 2.39% |
| Johnson & Johnson | 1.05% |
| Facebook Inc Class A | 1.05% |
| JPMorgan Chase & Co | 1.0% |
| Alphabet Inc Class C | 0.85% |
| Alphabet Inc Class A | 0.84% |
| Berkshire Hathaway Inc Class B | 0.75% |
| Visa Inc Class A | 0.74% |
DFAC’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Johnson & Johnson, and Facebook Inc Class A at 4.7%, 3.81%, 2.39%, 1.05%, and 1.05%.
JPMorgan Chase & Co (1.0%), Alphabet Inc Class C (0.85%), and Alphabet Inc Class A (0.84%) have a slightly smaller but still significant weight. Berkshire Hathaway Inc Class B and Visa Inc Class A are also represented in the DFAC’s holdings at 0.75% and 0.74%.
Risk Analysis
| VCSH | DFAC | |
| Mean Return | 0.24 | 1.19 |
| R-squared | 37.53 | 95.1 |
| Std. Deviation | 2.34 | 15.55 |
| Alpha | 0.93 | -2.75 |
| Beta | 0.48 | 1.12 |
| Sharpe Ratio | 0.97 | 0.88 |
| Treynor Ratio | 4.75 | 11.85 |
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Mean Return of 0.24 with a Standard Deviation of 2.34 and a Sharpe Ratio of 0.97. Its Alpha is 0.93 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 Dimensional U.S. Core Equity 2 ETF (DFAC) has a Alpha of -2.75 with a Beta of 1.12 and a Mean Return of 1.19. Its Standard Deviation is 15.55 while DFAC’s Treynor Ratio is 11.85. Furthermore, the fund has a R-squared of 95.1 and a Sharpe Ratio of 0.88.
VCSH’s Mean Return is 0.95 points lower than that of DFAC and its R-squared is 57.57 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than DFAC. The Alpha and Beta of VCSH are 3.68 points higher and 0.64 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | VCSH | DFAC |
| 2020 | 5.08% | 15.8% |
| 2019 | 6.85% | 29.54% |
| 2018 | 0.91% | -9.43% |
| 2017 | 2.45% | 18.82% |
| 2016 | 2.63% | 16.31% |
| 2015 | 1.25% | -2.53% |
| 2014 | 1.96% | 9.56% |
| 2013 | 1.37% | 37.55% |
| 2012 | 5.74% | 17.93% |
| 2011 | 2.94% | -1.96% |
| 2010 | 5.51% | 21.67% |
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 2013 was the strongest year for DFAC, returning 37.55% on an annual basis. The poorest year for DFAC in the last ten years was 2018, with a yield of -9.43%. Most years the Dimensional U.S. Core Equity 2 ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 15.8%, 16.31%, and 17.93% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VCSH | $10,000 | $13,569 | 3.12% |
| DFAC | $10,000 | $31,887 | 13.93% |
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 DFAC, the end total would have been $31,887. This equates to a $21,887 profit over 10 years and a compound annual growth rate (CAGR) of 13.93%.
VCSH’s CAGR is 10.81 percentage points lower than that of DFAC and as a result, would have yielded $18,318 less on a $10,000 investment. Thus, VCSH performed worse than DFAC by 10.81% annually.
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