Skip to content

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VCSHMTUM
NameVanguard Short-Term Corporate Bond Index Fund ETF SharesiShares MSCI USA Momentum Factor ETF
CategoryShort-Term BondLarge Growth
IssuerVanguardiShares
AUM47.88B14.53B
Avg. Return3.12%17.37%
Div. Yield1.89%0.44%
Expense Ratio0.05%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%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

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.

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VCSHMTUM
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 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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VCSH vs. MTUM - Annual Returns

YearVCSHMTUM
20205.08%29.69%
20196.85%27.57%
20180.91%-1.77%
20172.45%37.6%
20162.63%4.89%
20151.25%9.12%
20141.96%14.48%
20131.37%0.0%
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 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

FundInitial BalanceFinal BalanceCAGR
VCSH$10,000$12,2983.12%
MTUM$10,000$29,30117.37%

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.


Current recommendations:

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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) 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!

3) 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!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.