VCSH vs. IWR: What’s The Difference?

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

The expense ratio of VCSH is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%). VCSH is mostly comprised of BBB bonds while IWR has a high exposure to the technology sector. Overall, VCSH has provided lower returns than IWR over the past ten years.

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

Summary

VCSH IWR
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares Russell Mid-Cap ETF
Category Short-Term Bond Mid-Cap Blend
Issuer Vanguard iShares
AUM 47.88B 29.84B
Avg. Return 3.12% 14.15%
Div. Yield 1.89% 0.99%
Expense Ratio 0.05% 0.19%

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 ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

VCSH’s dividend yield is 0.90% higher than that of IWR (1.89% vs. 0.99%). Also, VCSH yielded on average 11.03% less per year over the past decade (3.12% vs. 14.15%). The expense ratio of VCSH is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%).

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.

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

Risk Analysis

VCSH IWR
Mean Return 0.24 1.17
R-squared 37.53 91.52
Std. Deviation 2.34 15.66
Alpha 0.93 -2.8
Beta 0.48 1.11
Sharpe Ratio 0.97 0.86
Treynor Ratio 4.75 11.72

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 Treynor Ratio of 4.75. Its Alpha is 0.93 while VCSH’s Standard Deviation is 2.34. Furthermore, the fund has a Mean Return of 0.24 and a R-squared of 37.53.

The iShares Russell Mid-Cap ETF (IWR) has a Treynor Ratio of 11.72 with a Beta of 1.11 and a R-squared of 91.52. Its Sharpe Ratio is 0.86 while IWR’s Alpha is -2.8. Furthermore, the fund has a Mean Return of 1.17 and a Standard Deviation of 15.66.

VCSH’s Mean Return is 0.93 points lower than that of IWR and its R-squared is 53.99 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IWR. The Alpha and Beta of VCSH are 3.73 points higher and 0.63 points lower than IWR’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. IWR - Annual Returns

Year VCSH IWR
2020 5.08% 16.91%
2019 6.85% 30.31%
2018 0.91% -9.13%
2017 2.45% 18.32%
2016 2.63% 13.58%
2015 1.25% -2.57%
2014 1.96% 13.03%
2013 1.37% 34.5%
2012 5.74% 17.13%
2011 2.94% -1.67%
2010 5.51% 25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

VCSH vs. IWR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
IWR $10,000 $31,737 14.15%

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 IWR, the end total would have been $31,737. This equates to a $21,737 profit over 10 years and a compound annual growth rate (CAGR) of 14.15%.

VCSH’s CAGR is 11.03 percentage points lower than that of IWR and as a result, would have yielded $18,168 less on a $10,000 investment. Thus, VCSH performed worse than IWR by 11.03% annually.


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