The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IAU is a iShares N/A fund. So, what’s the difference between VCSH and IAU? And which fund is better?
The expense ratio of VCSH is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%). VCSH is mostly comprised of BBB bonds while IAU has a high exposure to the technology sector. Overall, VCSH has provided lower returns than IAU over the past ten years.
In this article, we’ll compare VCSH vs. IAU. We’ll look at industry exposure and performance, as well as at their risk metrics and holdings. Moreover, I’ll also discuss VCSH’s and IAU’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares Gold Trust|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VCSH’s dividend yield is 1.89% higher than that of IAU (1.89% vs. 0.0%). Also, VCSH yielded on average 2.91% less per year over the past decade (3.12% vs. 6.03%). The expense ratio of VCSH is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%).
|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.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Alpha of 0.93 with a Standard Deviation of 2.34 and a Treynor Ratio of 4.75. Its Beta is 0.48 while VCSH’s R-squared is 37.53. Furthermore, the fund has a Sharpe Ratio of 0.97 and a Mean Return of 0.24.
The iShares Gold Trust (IAU) has a Alpha of 4.16 with a Beta of 0.48 and a Sharpe Ratio of 0.13. Its Standard Deviation is 16.97 while IAU’s Treynor Ratio is 1.5. Furthermore, the fund has a Mean Return of 0.23 and a R-squared of 16.03.
VCSH’s Mean Return is 0.01 points higher than that of IAU and its R-squared is 21.50 points higher. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IAU. The Alpha and Beta of VCSH are 3.23 points lower and 0.00 points lower than IAU’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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% 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 IAU, the end total would have been $13,121. This equates to a $3,121 profit over 10 years and a compound annual growth rate (CAGR) of 6.03%.
VCSH’s CAGR is 2.91 percentage points lower than that of IAU and as a result, would have yielded $448 more on a $10,000 investment. Thus, VCSH performed worse than IAU by 2.91% 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) 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!
2) 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!).
3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.