VCSH vs. EFV: What’s The Difference?

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

The expense ratio of VCSH is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%). VCSH is mostly comprised of BBB bonds while EFV has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than EFV over the past ten years.

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

Summary

VCSH EFV
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares MSCI EAFE Value ETF
Category Short-Term Bond Foreign Large Value
Issuer Vanguard iShares
AUM 47.88B 14.37B
Avg. Return 3.12% 3.99%
Div. Yield 1.89% 2.94%
Expense Ratio 0.05% 0.39%

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 MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

VCSH’s dividend yield is 1.05% lower than that of EFV (1.89% vs. 2.94%). Also, VCSH yielded on average 0.88% less per year over the past decade (3.12% vs. 3.99%). The expense ratio of VCSH is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%).

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.

EFV - Holdings

EFV Holdings Weight
Novartis AG 2.41%
Toyota Motor Corp 2.21%
Commonwealth Bank of Australia 1.59%
Siemens AG 1.45%
Sanofi SA 1.42%
HSBC Holdings PLC 1.4%
TotalEnergies SE 1.35%
Allianz SE 1.23%
GlaxoSmithKline PLC 1.18%
Rio Tinto PLC 1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

Risk Analysis

VCSH EFV
Mean Return 0.24 0.42
R-squared 37.53 92.15
Std. Deviation 2.34 16.53
Alpha 0.93 -1.77
Beta 0.48 1.05
Sharpe Ratio 0.97 0.26
Treynor Ratio 4.75 2.92

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

The iShares MSCI EAFE Value ETF (EFV) has a R-squared of 92.15 with a Mean Return of 0.42 and a Standard Deviation of 16.53. Its Alpha is -1.77 while EFV’s Treynor Ratio is 2.92. Furthermore, the fund has a Beta of 1.05 and a Sharpe Ratio of 0.26.

VCSH’s Mean Return is 0.18 points lower than that of EFV and its R-squared is 54.62 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than EFV. The Alpha and Beta of VCSH are 2.70 points higher and 0.57 points lower than EFV’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. EFV - Annual Returns

Year VCSH EFV
2020 5.08% -2.78%
2019 6.85% 15.97%
2018 0.91% -14.88%
2017 2.45% 21.22%
2016 2.63% 4.87%
2015 1.25% -5.89%
2014 1.96% -5.65%
2013 1.37% 22.61%
2012 5.74% 17.52%
2011 2.94% -12.24%
2010 5.51% 3.18%

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 EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

VCSH vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
EFV $10,000 $13,698 3.99%

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 EFV, the end total would have been $13,698. This equates to a $3,698 profit over 10 years and a compound annual growth rate (CAGR) of 3.99%.

VCSH’s CAGR is 0.88 percentage points lower than that of EFV and as a result, would have yielded $129 less on a $10,000 investment. Thus, VCSH performed worse than EFV by 0.88% annually.


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