VCSH vs. MTUM: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VCSH and MTUM? And which fund is better?

The expense ratio of VCSH is 0.10 percentage points lower than MTUM’s (0.05% vs. 0.15%). VCSH is mostly comprised of BBB bonds while MTUM has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than MTUM over the past ten years.

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

Summary

VCSH MTUM
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares MSCI USA Momentum Factor ETF
Category Short-Term Bond Large Growth
Issuer Vanguard iShares
AUM 47.88B 14.53B
Avg. Return 3.12% 17.37%
Div. Yield 1.89% 0.44%
Expense Ratio 0.05% 0.15%

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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

VCSH’s dividend yield is 1.45% higher than that of MTUM (1.89% vs. 0.44%). Also, VCSH yielded on average 14.25% less per year over the past decade (3.12% vs. 17.37%). The expense ratio of VCSH is 0.10 percentage points lower than MTUM’s (0.05% vs. 0.15%).

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.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

Risk Analysis

VCSH MTUM
Mean Return 0.24 0
R-squared 37.53 0
Std. Deviation 2.34 0
Alpha 0.93 0
Beta 0.48 0
Sharpe Ratio 0.97 0
Treynor Ratio 4.75 0

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a R-squared of 0 with a Beta of 0 and a Mean Return of 0. Its Alpha is 0 while MTUM’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.

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

Performance

Annual Returns

VCSH vs. MTUM - Annual Returns

Year VCSH MTUM
2020 5.08% 29.69%
2019 6.85% 27.57%
2018 0.91% -1.77%
2017 2.45% 37.6%
2016 2.63% 4.89%
2015 1.25% 9.12%
2014 1.96% 14.48%
2013 1.37% 0.0%
2012 5.74% 0.0%
2011 2.94% 0.0%
2010 5.51% 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 MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

VCSH vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $12,298 3.12%
MTUM $10,000 $29,301 17.37%

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 MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

VCSH’s CAGR is 14.25 percentage points lower than that of MTUM and as a result, would have yielded $17,003 less on a $10,000 investment. Thus, VCSH performed worse than MTUM by 14.25% annually.


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