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.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares S&P 500 Value ETF|
|Category||Short-Term Bond||Large Value|
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%).
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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.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
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%.
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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.
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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 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.
|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 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.
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