The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between VCSH and SCHB? And which fund is better?
The expense ratio of VCSH is 0.02 percentage points higher than SCHB’s (0.05% vs. 0.03%). VCSH is mostly comprised of BBB bonds while SCHB has a high exposure to the technology sector. Overall, VCSH has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare VCSH vs. SCHB. We’ll look at annual returns and portfolio growth, as well as at their performance and holdings. Moreover, I’ll also discuss VCSH’s and SCHB’s fund composition, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||Schwab U.S. Broad Market ETF|
|Category||Short-Term Bond||Large Blend|
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 Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
VCSH’s dividend yield is 0.50% higher than that of SCHB (1.89% vs. 1.39%). Also, VCSH yielded on average 11.31% less per year over the past decade (3.12% vs. 14.43%). The expense ratio of VCSH is 0.02 percentage points higher than SCHB’s (0.05% vs. 0.03%).
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|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.
|Facebook Inc A||1.88%|
|Alphabet Inc A||1.66%|
|Alphabet Inc Class C||1.61%|
|Berkshire Hathaway Inc Class B||1.19%|
|JPMorgan Chase & Co||1.06%|
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
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The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a R-squared of 37.53 with a Alpha of 0.93 and a Sharpe Ratio of 0.97. Its Beta is 0.48 while VCSH’s Treynor Ratio is 4.75. Furthermore, the fund has a Mean Return of 0.24 and a Standard Deviation of 2.34.
The Schwab U.S. Broad Market ETF (SCHB) has a Standard Deviation of 14.12 with a Beta of 1.04 and a Treynor Ratio of 13.58. Its Alpha is -0.58 while SCHB’s Mean Return is 1.23. Furthermore, the fund has a Sharpe Ratio of 1 and a R-squared of 99.33.
VCSH’s Mean Return is 0.99 points lower than that of SCHB and its R-squared is 61.80 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than SCHB. The Alpha and Beta of VCSH are 1.51 points higher and 0.56 points lower than SCHB’s Alpha and Beta.
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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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% 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 SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.
VCSH’s CAGR is 11.31 percentage points lower than that of SCHB and as a result, would have yielded $22,785 less on a $10,000 investment. Thus, VCSH performed worse than SCHB by 11.31% annually.
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