VCSH vs. MDY: What’s The Difference?

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.

Summary

VCSH MDY
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
AUM 47.88B 21.31B
Avg. Return 3.12% 13.29%
Div. Yield 1.89% 0.94%
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 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%).

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.

MDY - Holdings

MDY Holdings Weight
Bio-Techne Corp 0.75%
Molina Healthcare Inc 0.63%
Cognex Corp 0.63%
Fair Isaac Corp 0.62%
XPO Logistics Inc 0.61%
SolarEdge Technologies Inc 0.61%
Signature Bank 0.6%
Graco Inc 0.55%
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%.

Risk Analysis

VCSH MDY
Mean Return 0.24 1.08
R-squared 37.53 86.66
Std. Deviation 2.34 16.83
Alpha 0.93 -4.1
Beta 0.48 1.15
Sharpe Ratio 0.97 0.73
Treynor Ratio 4.75 9.97

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.

Performance

Annual Returns

VCSH vs. MDY - Annual Returns

Year VCSH MDY
2020 5.08% 13.51%
2019 6.85% 25.86%
2018 0.91% -11.28%
2017 2.45% 15.89%
2016 2.63% 20.33%
2015 1.25% -2.4%
2014 1.96% 9.42%
2013 1.37% 33.08%
2012 5.74% 17.58%
2011 2.94% -1.99%
2010 5.51% 26.17%

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.

Portfolio Growth

VCSH vs. MDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
MDY $10,000 $28,948 13.29%

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.


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