The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VCSH and MDY? And which fund is better?
The expense ratio of VCSH is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%). VCSH is mostly comprised of BBB bonds while MDY has a high exposure to the industrials sector. Overall, VCSH has provided lower returns than MDY over the past ten years.
In this article, we’ll compare VCSH vs. MDY. We’ll look at risk metrics and fund composition, as well as at their holdings and annual returns. Moreover, I’ll also discuss VCSH’s and MDY’s portfolio growth, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||SPDR S&P MIDCAP 400 ETF Trust|
|Category||Short-Term Bond||Mid-Cap Blend|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.
VCSH’s dividend yield is 0.95% higher than that of MDY (1.89% vs. 0.94%). Also, VCSH yielded on average 10.17% less per year over the past decade (3.12% vs. 13.29%). The expense ratio of VCSH is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%).
|VCSH Bond Sectors||Weight|
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.
|Molina Healthcare Inc||0.63%|
|Fair Isaac Corp||0.62%|
|XPO Logistics Inc||0.61%|
|SolarEdge Technologies Inc||0.61%|
|Camden Property Trust||0.55%|
|FactSet Research Systems Inc||0.54%|
MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.
SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Treynor Ratio of 4.75 with a R-squared of 37.53 and a Standard Deviation of 2.34. Its Sharpe Ratio is 0.97 while VCSH’s Alpha is 0.93. Furthermore, the fund has a Mean Return of 0.24 and a Beta of 0.48.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Treynor Ratio of 9.97 with a Alpha of -4.1 and a Standard Deviation of 16.83. Its Beta is 1.15 while MDY’s R-squared is 86.66. Furthermore, the fund has a Mean Return of 1.08 and a Sharpe Ratio of 0.73.
VCSH’s Mean Return is 0.84 points lower than that of MDY and its R-squared is 49.13 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than MDY. The Alpha and Beta of VCSH are 5.03 points higher and 0.67 points lower than MDY’s Alpha and Beta.
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 MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 MDY, the end total would have been $28,948. This equates to a $18,948 profit over 10 years and a compound annual growth rate (CAGR) of 13.29%.
VCSH’s CAGR is 10.17 percentage points lower than that of MDY and as a result, would have yielded $15,379 less on a $10,000 investment. Thus, VCSH performed worse than MDY by 10.17% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.