Skip to content

VCSH vs. IVE: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IVE is a iShares Large Value fund. So, what’s the difference between VCSH and IVE? And which fund is better?

The expense ratio of VCSH is 0.13 percentage points lower than IVE’s (0.05% vs. 0.18%). VCSH is mostly comprised of BBB bonds while IVE has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than IVE over the past ten years.

In this article, we’ll compare VCSH vs. IVE. We’ll look at portfolio growth and risk metrics, as well as at their performance and fund composition. Moreover, I’ll also discuss VCSH’s and IVE’s annual returns, industry exposure, and holdings and examine how these affect their overall returns.

Introduction To Mutual Funds
Introduction To Mutual Funds
TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VCSHIVE
NameVanguard Short-Term Corporate Bond Index Fund ETF SharesiShares S&P 500 Value ETF
CategoryShort-Term BondLarge Value
IssuerVanguardiShares
AUM47.88B22.4B
Avg. Return3.12%11.68%
Div. Yield1.89%1.88%
Expense Ratio0.05%0.18%

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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

VCSH’s dividend yield is 0.01% higher than that of IVE (1.89% vs. 1.88%). Also, VCSH yielded on average 8.57% less per year over the past decade (3.12% vs. 11.68%). The expense ratio of VCSH is 0.13 percentage points lower than IVE’s (0.05% vs. 0.18%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Holdings

VCSH - Holdings

VCSH Bond SectorsWeight
BBB47.49%
A43.06%
AA8.45%
AAA0.95%
Below B0.03%
Others0.02%
B0.0%
BB0.0%
US Government0.0%

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.

IVE - Holdings

IVE HoldingsWeight
Berkshire Hathaway Inc Class B3.05%
JPMorgan Chase & Co2.65%
The Walt Disney Co1.85%
Bank of America Corp1.67%
Johnson & Johnson1.57%
Exxon Mobil Corp1.41%
Pfizer Inc1.38%
Cisco Systems Inc1.35%
Verizon Communications Inc1.33%
Intel Corp1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VCSHIVE
Mean Return0.241.05
R-squared37.5392.08
Std. Deviation2.3414.3
Alpha0.93-2.9
Beta0.481.01
Sharpe Ratio0.970.83
Treynor Ratio4.7511.41

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Sharpe Ratio of 0.97 with a Beta of 0.48 and a R-squared of 37.53. Its Alpha is 0.93 while VCSH’s Treynor Ratio is 4.75. Furthermore, the fund has a Mean Return of 0.24 and a Standard Deviation of 2.34.

The iShares S&P 500 Value ETF (IVE) has a Alpha of -2.9 with a Beta of 1.01 and a Treynor Ratio of 11.41. Its Standard Deviation is 14.3 while IVE’s Sharpe Ratio is 0.83. Furthermore, the fund has a R-squared of 92.08 and a Mean Return of 1.05.

VCSH’s Mean Return is 0.81 points lower than that of IVE and its R-squared is 54.55 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IVE. The Alpha and Beta of VCSH are 3.83 points higher and 0.53 points lower than IVE’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VCSH vs. IVE - Annual Returns

YearVCSHIVE
20205.08%1.24%
20196.85%31.71%
20180.91%-9.09%
20172.45%15.19%
20162.63%17.17%
20151.25%-3.24%
20141.96%12.14%
20131.37%31.69%
20125.74%17.45%
20112.94%-0.63%
20105.51%14.9%

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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

VCSH vs. IVE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VCSH$10,000$13,5693.12%
IVE$10,000$27,28511.68%

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 IVE, the end total would have been $27,285. This equates to a $17,285 profit over 10 years and a compound annual growth rate (CAGR) of 11.68%.

VCSH’s CAGR is 8.57 percentage points lower than that of IVE and as a result, would have yielded $13,716 less on a $10,000 investment. Thus, VCSH performed worse than IVE by 8.57% 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.

Leave a Reply

Your email address will not be published.