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VCSH vs. IXUS: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between VCSH and IXUS? And which fund is better?

The expense ratio of VCSH is 0.04 percentage points lower than IXUS’s (0.05% vs. 0.09%). VCSH is mostly comprised of BBB bonds while IXUS has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than IXUS over the past ten years.

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

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Summary

VCSHIXUS
NameVanguard Short-Term Corporate Bond Index Fund ETF SharesiShares Core MSCI Total International Stock ETF
CategoryShort-Term BondForeign Large Blend
IssuerVanguardiShares
AUM47.88B29.54B
Avg. Return3.12%6.09%
Div. Yield1.89%2.13%
Expense Ratio0.05%0.09%

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 Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.

VCSH’s dividend yield is 0.24% lower than that of IXUS (1.89% vs. 2.13%). Also, VCSH yielded on average 2.97% less per year over the past decade (3.12% vs. 6.09%). The expense ratio of VCSH is 0.04 percentage points lower than IXUS’s (0.05% vs. 0.09%).

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Fund Composition

Holdings

VCSH - Holdings

VCSH Bond SectorsWeight
BBB47.49%
A43.06%
AA8.45%
AAA0.95%
Below B0.03%
Others0.02%
B0.0%
BB0.0%
US Government0.0%

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.

IXUS - Holdings

IXUS HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd1.64%
Tencent Holdings Ltd1.35%
Alibaba Group Holding Ltd Ordinary Shares1.34%
Nestle SA1.1%
Samsung Electronics Co Ltd1.06%
ASML Holding NV0.9%
Roche Holding AG0.81%
LVMH Moet Hennessy Louis Vuitton SE0.67%
Novartis AG0.62%
Toyota Motor Corp0.59%

IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.

ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.

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Risk Analysis

VCSHIXUS
Mean Return0.240
R-squared37.530
Std. Deviation2.340
Alpha0.930
Beta0.480
Sharpe Ratio0.970
Treynor Ratio4.750

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

The iShares Core MSCI Total International Stock ETF (IXUS) has a Standard Deviation of 0 with a Mean Return of 0 and a Alpha of 0. Its R-squared is 0 while IXUS’s Sharpe Ratio is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.

VCSH’s Mean Return is 0.24 points higher than that of IXUS and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than IXUS. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than IXUS’s Alpha and Beta.

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Performance

Annual Returns

VCSH vs. IXUS - Annual Returns

YearVCSHIXUS
20205.08%11.14%
20196.85%21.85%
20180.91%-14.55%
20172.45%28.08%
20162.63%4.66%
20151.25%-4.62%
20141.96%-3.96%
20131.37%15.85%
20125.74%0.0%
20112.94%0.0%
20105.51%0.0%

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 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.

Portfolio Growth

VCSH vs. IXUS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VCSH$10,000$12,2983.12%
IXUS$10,000$14,2096.09%

A $10,000 investment in VCSH would have resulted in a final balance of $12,298. This is a profit of $2,298 over 7 years and amounts to a compound annual growth rate (CAGR) of 3.12%.

With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.

VCSH’s CAGR is 2.97 percentage points lower than that of IXUS and as a result, would have yielded $1,911 less on a $10,000 investment. Thus, VCSH performed worse than IXUS by 2.97% annually.


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