The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IWB is a iShares Large Blend fund. So, what’s the difference between VCSH and IWB? And which fund is better?
The expense ratio of VCSH is 0.10 percentage points lower than IWB’s (0.05% vs. 0.15%). VCSH is mostly comprised of BBB bonds while IWB has a high exposure to the technology sector. Overall, VCSH has provided lower returns than IWB over the past ten years.
In this article, we’ll compare VCSH vs. IWB. We’ll look at holdings and annual returns, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VCSH’s and IWB’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
Summary
VCSH | IWB | |
Name | Vanguard Short-Term Corporate Bond Index Fund ETF Shares | iShares Russell 1000 ETF |
Category | Short-Term Bond | Large Blend |
Issuer | Vanguard | iShares |
AUM | 47.88B | 30.54B |
Avg. Return | 3.12% | 14.64% |
Div. Yield | 1.89% | 1.14% |
Expense Ratio | 0.05% | 0.15% |
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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
VCSH’s dividend yield is 0.75% higher than that of IWB (1.89% vs. 1.14%). Also, VCSH yielded on average 11.52% less per year over the past decade (3.12% vs. 14.64%). The expense ratio of VCSH is 0.10 percentage points lower than IWB’s (0.05% vs. 0.15%).
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 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.
IWB Holdings | Weight |
Apple Inc | 5.45% |
Microsoft Corp | 5.11% |
Amazon.com Inc | 3.43% |
Facebook Inc Class A | 2.03% |
Alphabet Inc Class A | 1.93% |
Alphabet Inc Class C | 1.82% |
Tesla Inc | 1.27% |
Berkshire Hathaway Inc Class B | 1.24% |
NVIDIA Corp | 1.11% |
JPMorgan Chase & Co | 1.09% |
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
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
VCSH | IWB | |
Mean Return | 0.24 | 1.27 |
R-squared | 37.53 | 99.73 |
Std. Deviation | 2.34 | 13.87 |
Alpha | 0.93 | -0.38 |
Beta | 0.48 | 1.02 |
Sharpe Ratio | 0.97 | 1.05 |
Treynor Ratio | 4.75 | 14.31 |
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Standard Deviation of 2.34 with a Treynor Ratio of 4.75 and a Alpha of 0.93. Its Mean Return is 0.24 while VCSH’s Sharpe Ratio is 0.97. Furthermore, the fund has a Beta of 0.48 and a R-squared of 37.53.
The iShares Russell 1000 ETF (IWB) has a Treynor Ratio of 14.31 with a R-squared of 99.73 and a Alpha of -0.38. Its Sharpe Ratio is 1.05 while IWB’s Beta is 1.02. Furthermore, the fund has a Mean Return of 1.27 and a Standard Deviation of 13.87.
VCSH’s Mean Return is 1.03 points lower than that of IWB and its R-squared is 62.20 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IWB. The Alpha and Beta of VCSH are 1.31 points higher and 0.54 points lower than IWB’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
Year | VCSH | IWB |
2020 | 5.08% | 20.8% |
2019 | 6.85% | 31.26% |
2018 | 0.91% | -4.91% |
2017 | 2.45% | 21.53% |
2016 | 2.63% | 11.91% |
2015 | 1.25% | 0.82% |
2014 | 1.96% | 13.08% |
2013 | 1.37% | 32.93% |
2012 | 5.74% | 16.27% |
2011 | 2.94% | 1.36% |
2010 | 5.51% | 15.94% |
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 2013 was the strongest year for IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% respectively.
Portfolio Growth
Fund | Initial Balance | Final Balance | CAGR |
VCSH | $10,000 | $13,569 | 3.12% |
IWB | $10,000 | $36,624 | 14.64% |
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 IWB, the end total would have been $36,624. This equates to a $26,624 profit over 10 years and a compound annual growth rate (CAGR) of 14.64%.
VCSH’s CAGR is 11.52 percentage points lower than that of IWB and as a result, would have yielded $23,055 less on a $10,000 investment. Thus, VCSH performed worse than IWB by 11.52% 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.