VCSH vs. VBK: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VCSH and VBK? And which fund is better?

The expense ratio of VCSH is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%). VCSH is mostly comprised of BBB bonds while VBK has a high exposure to the technology sector. Overall, VCSH has provided lower returns than VBK over the past ten years.

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

Summary

VCSH VBK
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Vanguard Small-Cap Growth Index Fund ETF Shares
Category Short-Term Bond Small Growth
Issuer Vanguard Vanguard
AUM 47.88B 37.89B
Avg. Return 3.12% 16.53%
Div. Yield 1.89% 0.45%
Expense Ratio 0.05% 0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

VCSH’s dividend yield is 1.44% higher than that of VBK (1.89% vs. 0.45%). Also, VCSH yielded on average 13.41% less per year over the past decade (3.12% vs. 16.53%). The expense ratio of VCSH is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%).

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.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

Risk Analysis

VCSH VBK
Mean Return 0.24 1.22
R-squared 37.53 80.56
Std. Deviation 2.34 17.95
Alpha 0.93 -2.81
Beta 0.48 1.18
Sharpe Ratio 0.97 0.78
Treynor Ratio 4.75 11.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Beta of 1.18 and a Alpha of -2.81. Its Mean Return is 1.22 while VBK’s Sharpe Ratio is 0.78. Furthermore, the fund has a Treynor Ratio of 11.18 and a R-squared of 80.56.

VCSH’s Mean Return is 0.98 points lower than that of VBK and its R-squared is 43.03 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than VBK. The Alpha and Beta of VCSH are 3.74 points higher and 0.70 points lower than VBK’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. VBK - Annual Returns

Year VCSH VBK
2020 5.08% 35.29%
2019 6.85% 32.75%
2018 0.91% -5.68%
2017 2.45% 21.9%
2016 2.63% 10.74%
2015 1.25% -2.51%
2014 1.96% 4.02%
2013 1.37% 38.18%
2012 5.74% 17.67%
2011 2.94% -1.43%
2010 5.51% 30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

VCSH vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
VBK $10,000 $37,165 16.53%

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 VBK, the end total would have been $37,165. This equates to a $27,165 profit over 10 years and a compound annual growth rate (CAGR) of 16.53%.

VCSH’s CAGR is 13.41 percentage points lower than that of VBK and as a result, would have yielded $23,596 less on a $10,000 investment. Thus, VCSH performed worse than VBK by 13.41% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply