VCSH vs. VGK: What’s The Difference?

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.

Summary

VCSH VGK
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Vanguard FTSE Europe Index Fund ETF Shares
Category Short-Term Bond Europe Stock
Issuer Vanguard Vanguard
AUM 47.88B 25.7B
Avg. Return 3.12% 6.68%
Div. Yield 1.89% 2.52%
Expense Ratio 0.05% 0.08%

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%).

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.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

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%.

Risk Analysis

VCSH VGK
Mean Return 0.24 0.61
R-squared 37.53 92.76
Std. Deviation 2.34 16.65
Alpha 0.93 0.45
Beta 0.48 1.06
Sharpe Ratio 0.97 0.4
Treynor Ratio 4.75 5.12

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.

Performance

Annual Returns

VCSH vs. VGK - Annual Returns

Year VCSH VGK
2020 5.08% 6.5%
2019 6.85% 24.26%
2018 0.91% -14.79%
2017 2.45% 27.06%
2016 2.63% -0.59%
2015 1.25% -1.87%
2014 1.96% -6.56%
2013 1.37% 24.93%
2012 5.74% 21.01%
2011 2.94% -11.49%
2010 5.51% 5.01%

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.

Portfolio Growth

VCSH vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
VGK $10,000 $17,475 6.68%

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.


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