The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VCSH and VGK? And which fund is better?
The expense ratio of VCSH is 0.03 percentage points lower than VGK’s (0.05% vs. 0.08%). VCSH is mostly comprised of BBB bonds while VGK has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than VGK over the past ten years.
In this article, we’ll compare VCSH vs. VGK. We’ll look at fund composition and risk metrics, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VCSH’s and VGK’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||Vanguard FTSE Europe Index Fund ETF Shares|
|Category||Short-Term Bond||Europe Stock|
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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
VCSH’s dividend yield is 0.63% lower than that of VGK (1.89% vs. 2.52%). Also, VCSH yielded on average 3.56% less per year over the past decade (3.12% vs. 6.68%). The expense ratio of VCSH is 0.03 percentage points lower than VGK’s (0.05% vs. 0.08%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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.
|ASML Holding NV||2.2%|
|Roche Holding AG||2.13%|
|LVMH Moet Hennessy Louis Vuitton SE||1.58%|
|Novo Nordisk A/S B||1.09%|
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Treynor Ratio of 4.75 with a Beta of 0.48 and a R-squared of 37.53. Its Alpha is 0.93 while VCSH’s Standard Deviation is 2.34. Furthermore, the fund has a Sharpe Ratio of 0.97 and a Mean Return of 0.24.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Alpha of 0.45 with a Treynor Ratio of 5.12 and a Sharpe Ratio of 0.4. Its Mean Return is 0.61 while VGK’s Beta is 1.06. Furthermore, the fund has a Standard Deviation of 16.65 and a R-squared of 92.76.
VCSH’s Mean Return is 0.37 points lower than that of VGK and its R-squared is 55.23 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than VGK. The Alpha and Beta of VCSH are 0.48 points higher and 0.58 points lower than VGK’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% 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 VGK, the end total would have been $17,475. This equates to a $7,475 profit over 10 years and a compound annual growth rate (CAGR) of 6.68%.
VCSH’s CAGR is 3.56 percentage points lower than that of VGK and as a result, would have yielded $3,906 less on a $10,000 investment. Thus, VCSH performed worse than VGK by 3.56% annually.
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.