The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IUSB is a iShares N/A fund. So, what’s the difference between VCSH and IUSB? And which fund is better?
The expense ratio of VCSH is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%). VCSH is mostly comprised of BBB bonds and IUSB has a high exposure to AAA bond. Overall, VCSH has provided lower returns than IUSB over the past ten years.
In this article, we’ll compare VCSH vs. IUSB. We’ll look at annual returns and fund composition, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VCSH’s and IUSB’s performance, industry exposure, and risk metrics and examine how these affect their overall returns.
Summary
| VCSH | IUSB | |
| Name | Vanguard Short-Term Corporate Bond Index Fund ETF Shares | iShares Core Total USD Bond Market ETF |
| Category | Short-Term Bond | N/A |
| Issuer | Vanguard | iShares |
| AUM | 47.88B | 14.49B |
| Avg. Return | 3.12% | 4.13% |
| Div. Yield | 1.89% | 2.1% |
| Expense Ratio | 0.05% | 0.06% |
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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
VCSH’s dividend yield is 0.21% lower than that of IUSB (1.89% vs. 2.1%). Also, VCSH yielded on average 1.01% less per year over the past decade (3.12% vs. 4.13%). The expense ratio of VCSH is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%).
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.
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
Risk Analysis
| VCSH | IUSB | |
| Mean Return | 0.24 | 0 |
| R-squared | 37.53 | 0 |
| Std. Deviation | 2.34 | 0 |
| Alpha | 0.93 | 0 |
| Beta | 0.48 | 0 |
| Sharpe Ratio | 0.97 | 0 |
| Treynor Ratio | 4.75 | 0 |
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Standard Deviation of 2.34 with a R-squared of 37.53 and a Mean Return of 0.24. Its Alpha is 0.93 while VCSH’s Beta is 0.48. Furthermore, the fund has a Treynor Ratio of 4.75 and a Sharpe Ratio of 0.97.
The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a Mean Return of 0 and a R-squared of 0. Its Treynor Ratio is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.
VCSH’s Mean Return is 0.24 points higher than that of IUSB and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than IUSB. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than IUSB’s Alpha and Beta.
Performance
Annual Returns
| Year | VCSH | IUSB |
| 2020 | 5.08% | 7.59% |
| 2019 | 6.85% | 9.26% |
| 2018 | 0.91% | -0.38% |
| 2017 | 2.45% | 4.06% |
| 2016 | 2.63% | 3.78% |
| 2015 | 1.25% | 0.46% |
| 2014 | 1.96% | 0.0% |
| 2013 | 1.37% | 0.0% |
| 2012 | 5.74% | 0.0% |
| 2011 | 2.94% | 0.0% |
| 2010 | 5.51% | 0.0% |
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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VCSH | $10,000 | $12,061 | 3.12% |
| IUSB | $10,000 | $12,704 | 4.13% |
A $10,000 investment in VCSH would have resulted in a final balance of $12,061. This is a profit of $2,061 over 6 years and amounts to a compound annual growth rate (CAGR) of 3.12%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
VCSH’s CAGR is 1.01 percentage points lower than that of IUSB and as a result, would have yielded $643 less on a $10,000 investment. Thus, VCSH performed worse than IUSB by 1.01% annually.
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