VCSH vs. IVW: What’s The Difference?

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

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

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

Summary

VCSH IVW
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares S&P 500 Growth ETF
Category Short-Term Bond Large Growth
Issuer Vanguard iShares
AUM 47.88B 35.72B
Avg. Return 3.12% 16.74%
Div. Yield 1.89% 0.61%
Expense Ratio 0.05% 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 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

VCSH’s dividend yield is 1.28% higher than that of IVW (1.89% vs. 0.61%). Also, VCSH yielded on average 13.62% less per year over the past decade (3.12% vs. 16.74%). The expense ratio of VCSH is 0.13 percentage points lower than IVW’s (0.05% vs. 0.18%).

Fund Composition

Holdings

VCSH - 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.

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

Risk Analysis

VCSH IVW
Mean Return 0.24 1.44
R-squared 37.53 93.82
Std. Deviation 2.34 13.77
Alpha 0.93 2.19
Beta 0.48 0.98
Sharpe Ratio 0.97 1.21
Treynor Ratio 4.75 17.24

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Treynor Ratio of 4.75 with a Mean Return of 0.24 and a Standard Deviation of 2.34. 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 Alpha of 0.93.

The iShares S&P 500 Growth ETF (IVW) has a Standard Deviation of 13.77 with a Sharpe Ratio of 1.21 and a Treynor Ratio of 17.24. Its Mean Return is 1.44 while IVW’s Alpha is 2.19. Furthermore, the fund has a R-squared of 93.82 and a Beta of 0.98.

VCSH’s Mean Return is 1.20 points lower than that of IVW and its R-squared is 56.29 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IVW. The Alpha and Beta of VCSH are 1.26 points lower and 0.50 points lower than IVW’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. IVW - Annual Returns

Year VCSH IVW
2020 5.08% 33.21%
2019 6.85% 30.91%
2018 0.91% -0.17%
2017 2.45% 27.2%
2016 2.63% 6.74%
2015 1.25% 5.33%
2014 1.96% 14.67%
2013 1.37% 32.48%
2012 5.74% 14.39%
2011 2.94% 4.49%
2010 5.51% 14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

VCSH vs. IVW - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
IVW $10,000 $45,206 16.74%

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 IVW, the end total would have been $45,206. This equates to a $35,206 profit over 10 years and a compound annual growth rate (CAGR) of 16.74%.

VCSH’s CAGR is 13.62 percentage points lower than that of IVW and as a result, would have yielded $31,637 less on a $10,000 investment. Thus, VCSH performed worse than IVW by 13.62% annually.


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