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.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares Core Dividend Growth ETF|
|Category||Short-Term Bond||Large Value|
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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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.
|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%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.