The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VCSH and IGSB? And which fund is better?
The expense ratio of VCSH is 0.01 percentage points lower than IGSB’s (0.05% vs. 0.06%). VCSH is mostly comprised of BBB bonds and IGSB has a high exposure to BBB bond. Overall, VCSH has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare VCSH vs. IGSB. We’ll look at industry exposure and annual returns, as well as at their fund composition and performance. Moreover, I’ll also discuss VCSH’s and IGSB’s risk metrics, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares 1-5 Year Investment Grade Corporate Bond ETF|
|Category||Short-Term Bond||Short-Term 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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
VCSH’s dividend yield is 0.13% lower than that of IGSB (1.89% vs. 2.02%). Also, VCSH yielded on average 0.61% more per year over the past decade (3.12% vs. 2.51%). The expense ratio of VCSH is 0.01 percentage points lower than IGSB’s (0.05% vs. 0.06%).
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|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.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Treynor Ratio of 4.75 with a Standard Deviation of 2.34 and a Beta of 0.48. Its R-squared is 37.53 while VCSH’s Sharpe Ratio is 0.97. Furthermore, the fund has a Alpha of 0.93 and a Mean Return of 0.24.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Treynor Ratio of 4.82 with a Alpha of 0.69 and a Sharpe Ratio of 0.82. Its Beta is 0.34 while IGSB’s Mean Return is 0.19. Furthermore, the fund has a R-squared of 26.13 and a Standard Deviation of 2.
VCSH’s Mean Return is 0.05 points higher than that of IGSB and its R-squared is 11.40 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than IGSB. The Alpha and Beta of VCSH are 0.24 points higher and 0.14 points higher than IGSB’s Alpha and Beta.
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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 2019 was the strongest year for IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% 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 IGSB, the end total would have been $12,637. This equates to a $2,637 profit over 10 years and a compound annual growth rate (CAGR) of 2.51%.
VCSH’s CAGR is 0.61 percentage points higher than that of IGSB and as a result, would have yielded $932 more on a $10,000 investment. Thus, VCSH outperformed IGSB by 0.61% annually.
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