VCSH vs. IWS: What’s The Difference?

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

The expense ratio of VCSH is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%). VCSH is mostly comprised of BBB bonds while IWS has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than IWS over the past ten years.

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

Summary

VCSH IWS
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares Russell Mid-Cap Value ETF
Category Short-Term Bond Mid-Cap Value
Issuer Vanguard iShares
AUM 47.88B 14.24B
Avg. Return 3.12% 12.35%
Div. Yield 1.89% 1.34%
Expense Ratio 0.05% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VCSH’s dividend yield is 0.55% higher than that of IWS (1.89% vs. 1.34%). Also, VCSH yielded on average 9.23% less per year over the past decade (3.12% vs. 12.35%). The expense ratio of VCSH is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%).

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.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

VCSH IWS
Mean Return 0.24 1.06
R-squared 37.53 87.04
Std. Deviation 2.34 16.03
Alpha 0.93 -4.11
Beta 0.48 1.1
Sharpe Ratio 0.97 0.75
Treynor Ratio 4.75 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Alpha of -4.11 with a Mean Return of 1.06 and a Sharpe Ratio of 0.75. Its Beta is 1.1 while IWS’s R-squared is 87.04. Furthermore, the fund has a Standard Deviation of 16.03 and a Treynor Ratio of 10.3.

VCSH’s Mean Return is 0.82 points lower than that of IWS and its R-squared is 49.51 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than IWS. The Alpha and Beta of VCSH are 5.04 points higher and 0.62 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. IWS - Annual Returns

Year VCSH IWS
2020 5.08% 4.76%
2019 6.85% 26.78%
2018 0.91% -12.36%
2017 2.45% 13.1%
2016 2.63% 19.69%
2015 1.25% -4.93%
2014 1.96% 14.49%
2013 1.37% 33.11%
2012 5.74% 18.27%
2011 2.94% -1.55%
2010 5.51% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VCSH vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
IWS $10,000 $26,581 12.35%

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 IWS, the end total would have been $26,581. This equates to a $16,581 profit over 10 years and a compound annual growth rate (CAGR) of 12.35%.

VCSH’s CAGR is 9.23 percentage points lower than that of IWS and as a result, would have yielded $13,012 less on a $10,000 investment. Thus, VCSH performed worse than IWS by 9.23% annually.


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