VCSH vs. IWN: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IWN is a iShares Small Value fund. So, what’s the difference between VCSH and IWN? And which fund is better?

The expense ratio of VCSH is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%). VCSH is mostly comprised of BBB bonds while IWN has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than IWN over the past ten years.

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

Summary

VCSH IWN
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares Russell 2000 Value ETF
Category Short-Term Bond Small Value
Issuer Vanguard iShares
AUM 47.88B 15.48B
Avg. Return 3.12% 10.96%
Div. Yield 1.89% 1.26%
Expense Ratio 0.05% 0.24%

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 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

VCSH’s dividend yield is 0.63% higher than that of IWN (1.89% vs. 1.26%). Also, VCSH yielded on average 7.84% less per year over the past decade (3.12% vs. 10.96%). The expense ratio of VCSH is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%).

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.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

Risk Analysis

VCSH IWN
Mean Return 0.24 1.01
R-squared 37.53 72.64
Std. Deviation 2.34 19.28
Alpha 0.93 -6.32
Beta 0.48 1.21
Sharpe Ratio 0.97 0.59
Treynor Ratio 4.75 8.3

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

The iShares Russell 2000 Value ETF (IWN) has a Mean Return of 1.01 with a Alpha of -6.32 and a R-squared of 72.64. Its Treynor Ratio is 8.3 while IWN’s Beta is 1.21. Furthermore, the fund has a Sharpe Ratio of 0.59 and a Standard Deviation of 19.28.

VCSH’s Mean Return is 0.77 points lower than that of IWN and its R-squared is 35.11 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IWN. The Alpha and Beta of VCSH are 7.25 points higher and 0.73 points lower than IWN’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. IWN - Annual Returns

Year VCSH IWN
2020 5.08% 4.5%
2019 6.85% 22.17%
2018 0.91% -12.94%
2017 2.45% 7.73%
2016 2.63% 31.64%
2015 1.25% -7.53%
2014 1.96% 4.13%
2013 1.37% 34.3%
2012 5.74% 17.92%
2011 2.94% -5.64%
2010 5.51% 24.29%

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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

VCSH vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
IWN $10,000 $22,680 10.96%

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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.

VCSH’s CAGR is 7.84 percentage points lower than that of IWN and as a result, would have yielded $9,111 less on a $10,000 investment. Thus, VCSH performed worse than IWN by 7.84% annually.


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