The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and USMV is a iShares Large Blend fund. So, what’s the difference between VCSH and USMV? And which fund is better?
The expense ratio of VCSH is 0.10 percentage points lower than USMV’s (0.05% vs. 0.15%). VCSH is mostly comprised of BBB bonds while USMV has a high exposure to the technology sector. Overall, VCSH has provided lower returns than USMV over the past ten years.
In this article, we’ll compare VCSH vs. USMV. We’ll look at annual returns and performance, as well as at their risk metrics and holdings. Moreover, I’ll also discuss VCSH’s and USMV’s fund composition, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||iShares MSCI USA Min Vol Factor 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 iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
VCSH’s dividend yield is 0.39% higher than that of USMV (1.89% vs. 1.5%). Also, VCSH yielded on average 10.78% less per year over the past decade (3.12% vs. 13.89%). The expense ratio of VCSH is 0.10 percentage points lower than USMV’s (0.05% vs. 0.15%).
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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.
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
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The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Beta of 0.48 with a Sharpe Ratio of 0.97 and a Alpha of 0.93. Its Mean Return is 0.24 while VCSH’s R-squared is 37.53. Furthermore, the fund has a Standard Deviation of 2.34 and a Treynor Ratio of 4.75.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Beta is 0 while USMV’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.
VCSH’s Mean Return is 0.24 points higher than that of USMV and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than USMV. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than USMV’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 2019 was the strongest year for USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VCSH would have resulted in a final balance of $12,466. This is a profit of $2,466 over 8 years and amounts to a compound annual growth rate (CAGR) of 3.12%.
With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.
VCSH’s CAGR is 10.78 percentage points lower than that of USMV and as a result, would have yielded $15,141 less on a $10,000 investment. Thus, VCSH performed worse than USMV by 10.78% annually.
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