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 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 | 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
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
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.
Current recommendations:
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.