VCSH vs. VBR: What’s The Difference?

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

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

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

Summary

VCSH VBR
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Vanguard Small-Cap Value Index Fund ETF Shares
Category Short-Term Bond Small Value
Issuer Vanguard Vanguard
AUM 47.88B 48.08B
Avg. Return 3.12% 12.28%
Div. Yield 1.89% 1.6%
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

VCSH’s dividend yield is 0.29% higher than that of VBR (1.89% vs. 1.6%). Also, VCSH yielded on average 9.16% less per year over the past decade (3.12% vs. 12.28%). The expense ratio of VCSH is 0.02 percentage points lower than VBR’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.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

VCSH VBR
Mean Return 0.24 1.08
R-squared 37.53 82.2
Std. Deviation 2.34 18.37
Alpha 0.93 -5.09
Beta 0.48 1.23
Sharpe Ratio 0.97 0.67
Treynor Ratio 4.75 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Sharpe Ratio of 0.67 and a R-squared of 82.2. Its Mean Return is 1.08 while VBR’s Treynor Ratio is 9.15. Furthermore, the fund has a Beta of 1.23 and a Alpha of -5.09.

VCSH’s Mean Return is 0.84 points lower than that of VBR and its R-squared is 44.67 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than VBR. The Alpha and Beta of VCSH are 6.02 points higher and 0.75 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. VBR - Annual Returns

Year VCSH VBR
2020 5.08% 5.82%
2019 6.85% 22.76%
2018 0.91% -12.22%
2017 2.45% 11.79%
2016 2.63% 24.8%
2015 1.25% -4.67%
2014 1.96% 10.55%
2013 1.37% 36.57%
2012 5.74% 18.78%
2011 2.94% -4.05%
2010 5.51% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

VCSH vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
VBR $10,000 $26,095 12.28%

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 VBR, the end total would have been $26,095. This equates to a $16,095 profit over 10 years and a compound annual growth rate (CAGR) of 12.28%.

VCSH’s CAGR is 9.16 percentage points lower than that of VBR and as a result, would have yielded $12,526 less on a $10,000 investment. Thus, VCSH performed worse than VBR by 9.16% annually.


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