VCSH vs. DGRO: What’s The Difference?

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

The expense ratio of VCSH is 0.03 percentage points lower than DGRO’s (0.05% vs. 0.08%). VCSH is mostly comprised of BBB bonds while DGRO has a high exposure to the technology sector. Overall, VCSH has provided lower returns than DGRO over the past ten years.

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

Summary

VCSH DGRO
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares Core Dividend Growth ETF
Category Short-Term Bond Large Value
Issuer Vanguard iShares
AUM 47.88B 20B
Avg. Return 3.12% 12.46%
Div. Yield 1.89% 2.04%
Expense Ratio 0.05% 0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

VCSH’s dividend yield is 0.15% lower than that of DGRO (1.89% vs. 2.04%). Also, VCSH yielded on average 9.34% less per year over the past decade (3.12% vs. 12.46%). The expense ratio of VCSH is 0.03 percentage points lower than DGRO’s (0.05% vs. 0.08%).

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.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

VCSH DGRO
Mean Return 0.24 0
R-squared 37.53 0
Std. Deviation 2.34 0
Alpha 0.93 0
Beta 0.48 0
Sharpe Ratio 0.97 0
Treynor Ratio 4.75 0

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

The iShares Core Dividend Growth ETF (DGRO) has a Beta of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Treynor Ratio is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Standard Deviation of 0.

VCSH’s Mean Return is 0.24 points higher than that of DGRO and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than DGRO. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than DGRO’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. DGRO - Annual Returns

Year VCSH DGRO
2020 5.08% 9.47%
2019 6.85% 30.02%
2018 0.91% -2.24%
2017 2.45% 22.84%
2016 2.63% 15.27%
2015 1.25% -0.62%
2014 1.96% 0.0%
2013 1.37% 0.0%
2012 5.74% 0.0%
2011 2.94% 0.0%
2010 5.51% 0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VCSH vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $12,061 3.12%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in VCSH would have resulted in a final balance of $12,061. This is a profit of $2,061 over 6 years and amounts to a compound annual growth rate (CAGR) of 3.12%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

VCSH’s CAGR is 9.34 percentage points lower than that of DGRO and as a result, would have yielded $7,519 less on a $10,000 investment. Thus, VCSH performed worse than DGRO by 9.34% annually.


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