VCSH vs. RSP: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and RSP is a Invesco Large Blend fund. So, what’s the difference between VCSH and RSP? And which fund is better?

The expense ratio of VCSH is 0.15 percentage points lower than RSP’s (0.05% vs. 0.2%). VCSH is mostly comprised of BBB bonds while RSP has a high exposure to the technology sector. Overall, VCSH has provided lower returns than RSP over the past ten years.

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

Summary

VCSH RSP
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Invesco S&P 500 Equal Weight ETF
Category Short-Term Bond Large Blend
Issuer Vanguard Invesco
AUM 47.88B 28.62B
Avg. Return 3.12% 13.79%
Div. Yield 1.89% 1.31%
Expense Ratio 0.05% 0.2%

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 Invesco S&P 500 Equal Weight ETF (RSP) is a Large Blend fund that is issued by Invesco. It currently has 28.62B total assets under management and has yielded an average annual return of 13.79% over the past 10 years. The fund has a dividend yield of 1.31% with an expense ratio of 0.2%.

VCSH’s dividend yield is 0.58% higher than that of RSP (1.89% vs. 1.31%). Also, VCSH yielded on average 10.67% less per year over the past decade (3.12% vs. 13.79%). The expense ratio of VCSH is 0.15 percentage points lower than RSP’s (0.05% vs. 0.2%).

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.

RSP - Holdings

RSP Holdings Weight
Chipotle Mexican Grill Inc 0.27%
Nike Inc Class B 0.25%
MSCI Inc 0.25%
Monolithic Power Systems Inc 0.25%
Enphase Energy Inc 0.25%
Advanced Micro Devices Inc 0.25%
ResMed Inc 0.24%
PerkinElmer Inc 0.24%
IDEXX Laboratories Inc 0.24%
Danaher Corp 0.24%

RSP’s Top Holdings are Chipotle Mexican Grill Inc, Nike Inc Class B, MSCI Inc, Monolithic Power Systems Inc, and Enphase Energy Inc at 0.27%, 0.25%, 0.25%, 0.25%, and 0.25%.

Advanced Micro Devices Inc (0.25%), ResMed Inc (0.24%), and PerkinElmer Inc (0.24%) have a slightly smaller but still significant weight. IDEXX Laboratories Inc and Danaher Corp are also represented in the RSP’s holdings at 0.24% and 0.24%.

Risk Analysis

VCSH RSP
Mean Return 0.24 1.19
R-squared 37.53 94.47
Std. Deviation 2.34 15.36
Alpha 0.93 -2.45
Beta 0.48 1.1
Sharpe Ratio 0.97 0.89
Treynor Ratio 4.75 12.12

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

The Invesco S&P 500 Equal Weight ETF (RSP) has a Mean Return of 1.19 with a Sharpe Ratio of 0.89 and a Treynor Ratio of 12.12. Its Beta is 1.1 while RSP’s R-squared is 94.47. Furthermore, the fund has a Standard Deviation of 15.36 and a Alpha of -2.45.

VCSH’s Mean Return is 0.95 points lower than that of RSP and its R-squared is 56.94 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than RSP. The Alpha and Beta of VCSH are 3.38 points higher and 0.62 points lower than RSP’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. RSP - Annual Returns

Year VCSH RSP
2020 5.08% 12.75%
2019 6.85% 28.94%
2018 0.91% -7.77%
2017 2.45% 18.52%
2016 2.63% 14.34%
2015 1.25% -2.57%
2014 1.96% 14.02%
2013 1.37% 35.6%
2012 5.74% 17.04%
2011 2.94% -0.5%
2010 5.51% 21.3%

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 RSP, returning 35.6% on an annual basis. The poorest year for RSP in the last ten years was 2018, with a yield of -7.77%. Most years the Invesco S&P 500 Equal Weight ETF has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 14.02%, 14.34%, and 17.04% respectively.

Portfolio Growth

VCSH vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
RSP $10,000 $31,875 13.79%

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 RSP, the end total would have been $31,875. This equates to a $21,875 profit over 10 years and a compound annual growth rate (CAGR) of 13.79%.

VCSH’s CAGR is 10.67 percentage points lower than that of RSP and as a result, would have yielded $18,306 less on a $10,000 investment. Thus, VCSH performed worse than RSP by 10.67% annually.


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