VCSH vs. DIA: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VCSH and DIA? And which fund is better?

The expense ratio of VCSH is 0.11 percentage points lower than DIA’s (0.05% vs. 0.16%). VCSH is mostly comprised of BBB bonds while DIA has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than DIA over the past ten years.

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

Summary

VCSH DIA
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares SPDR Dow Jones Industrial Average ETF Trust
Category Short-Term Bond Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 47.88B 30.46B
Avg. Return 3.12% 13.35%
Div. Yield 1.89% 1.61%
Expense Ratio 0.05% 0.16%

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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

VCSH’s dividend yield is 0.28% higher than that of DIA (1.89% vs. 1.61%). Also, VCSH yielded on average 10.23% less per year over the past decade (3.12% vs. 13.35%). The expense ratio of VCSH is 0.11 percentage points lower than DIA’s (0.05% vs. 0.16%).

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.

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

Risk Analysis

VCSH DIA
Mean Return 0.24 1.13
R-squared 37.53 93.31
Std. Deviation 2.34 13.68
Alpha 0.93 -0.94
Beta 0.48 0.97
Sharpe Ratio 0.97 0.94
Treynor Ratio 4.75 13.07

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

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Standard Deviation of 13.68 with a Sharpe Ratio of 0.94 and a R-squared of 93.31. Its Alpha is -0.94 while DIA’s Mean Return is 1.13. Furthermore, the fund has a Beta of 0.97 and a Treynor Ratio of 13.07.

VCSH’s Mean Return is 0.89 points lower than that of DIA and its R-squared is 55.78 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than DIA. The Alpha and Beta of VCSH are 1.87 points higher and 0.49 points lower than DIA’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. DIA - Annual Returns

Year VCSH DIA
2020 5.08% 9.63%
2019 6.85% 25.09%
2018 0.91% -3.6%
2017 2.45% 27.97%
2016 2.63% 16.28%
2015 1.25% 0.1%
2014 1.96% 9.88%
2013 1.37% 29.41%
2012 5.74% 10.04%
2011 2.94% 8.21%
2010 5.51% 13.87%

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 DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

VCSH vs. DIA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
DIA $10,000 $33,341 13.35%

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 DIA, the end total would have been $33,341. This equates to a $23,341 profit over 10 years and a compound annual growth rate (CAGR) of 13.35%.

VCSH’s CAGR is 10.23 percentage points lower than that of DIA and as a result, would have yielded $19,772 less on a $10,000 investment. Thus, VCSH performed worse than DIA by 10.23% annually.


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