The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VCSH and EMB? And which fund is better?
The expense ratio of VCSH is 0.34 percentage points lower than EMB’s (0.05% vs. 0.39%). VCSH is mostly comprised of BBB bonds and EMB has a high exposure to BBB bond. Overall, VCSH has provided lower returns than EMB over the past ten years.
In this article, we’ll compare VCSH vs. EMB. We’ll look at holdings and fund composition, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VCSH’s and EMB’s risk metrics, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Short-Term Bond||Emerging Markets Bond|
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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
VCSH’s dividend yield is 1.96% lower than that of EMB (1.89% vs. 3.85%). Also, VCSH yielded on average 3.32% less per year over the past decade (3.12% vs. 6.43%). The expense ratio of VCSH is 0.34 percentage points lower than EMB’s (0.05% vs. 0.39%).
|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.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
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 R-squared is 37.53 while VCSH’s Beta is 0.48. Furthermore, the fund has a Alpha of 0.93 and a Standard Deviation of 2.34.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Mean Return of 0.44 with a Treynor Ratio of 3.24 and a Standard Deviation of 8.44. Its Sharpe Ratio is 0.55 while EMB’s Beta is 1.36. Furthermore, the fund has a Alpha of 0.89 and a R-squared of 23.34.
VCSH’s Mean Return is 0.20 points lower than that of EMB and its R-squared is 14.19 points higher. With a Standard Deviation of 2.34, VCSH is slightly less volatile than EMB. The Alpha and Beta of VCSH are 0.04 points higher and 0.88 points lower than EMB’s Alpha and Beta.
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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 EMB, the end total would have been $17,309. This equates to a $7,309 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.
VCSH’s CAGR is 3.32 percentage points lower than that of EMB and as a result, would have yielded $3,740 less on a $10,000 investment. Thus, VCSH performed worse than EMB by 3.32% annually.
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