VCSH vs. IWP: What’s The Difference?

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

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

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

Summary

VCSH IWP
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares Russell Mid-Cap Growth ETF
Category Short-Term Bond Mid-Cap Growth
Issuer Vanguard iShares
AUM 47.88B 15.7B
Avg. Return 3.12% 16.75%
Div. Yield 1.89% 0.26%
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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

VCSH’s dividend yield is 1.63% higher than that of IWP (1.89% vs. 0.26%). Also, VCSH yielded on average 13.63% less per year over the past decade (3.12% vs. 16.75%). The expense ratio of VCSH is 0.19 percentage points lower than IWP’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.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

Risk Analysis

VCSH IWP
Mean Return 0.24 1.27
R-squared 37.53 87.01
Std. Deviation 2.34 16.05
Alpha 0.93 -1.03
Beta 0.48 1.1
Sharpe Ratio 0.97 0.91
Treynor Ratio 4.75 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Mean Return of 1.27 with a Sharpe Ratio of 0.91 and a Treynor Ratio of 12.98. Its R-squared is 87.01 while IWP’s Standard Deviation is 16.05. Furthermore, the fund has a Beta of 1.1 and a Alpha of -1.03.

VCSH’s Mean Return is 1.03 points lower than that of IWP and its R-squared is 49.48 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IWP. The Alpha and Beta of VCSH are 1.96 points higher and 0.62 points lower than IWP’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. IWP - Annual Returns

Year VCSH IWP
2020 5.08% 35.29%
2019 6.85% 35.14%
2018 0.91% -4.95%
2017 2.45% 24.98%
2016 2.63% 7.15%
2015 1.25% -0.39%
2014 1.96% 11.68%
2013 1.37% 35.44%
2012 5.74% 15.62%
2011 2.94% -1.82%
2010 5.51% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

VCSH vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
IWP $10,000 $39,802 16.75%

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 IWP, the end total would have been $39,802. This equates to a $29,802 profit over 10 years and a compound annual growth rate (CAGR) of 16.75%.

VCSH’s CAGR is 13.63 percentage points lower than that of IWP and as a result, would have yielded $26,233 less on a $10,000 investment. Thus, VCSH performed worse than IWP by 13.63% annually.


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