VCSH vs. VLUE: What’s The Difference?

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

The expense ratio of VCSH is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%). VCSH is mostly comprised of BBB bonds while VLUE has a high exposure to the technology sector. Overall, VCSH has provided lower returns than VLUE over the past ten years.

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

Summary

VCSH VLUE
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares iShares MSCI USA Value Factor ETF
Category Short-Term Bond Large Value
Issuer Vanguard iShares
AUM 47.88B 15.95B
Avg. Return 3.12% 8.91%
Div. Yield 1.89% 1.89%
Expense Ratio 0.05% 0.15%

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 Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VCSH’s dividend yield is 0.00% lower than that of VLUE (1.89% vs. 1.89%). Also, VCSH yielded on average 5.79% less per year over the past decade (3.12% vs. 8.91%). The expense ratio of VCSH is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%).

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.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

Risk Analysis

VCSH VLUE
Mean Return 0.24 0
R-squared 37.53 0
Std. Deviation 2.34 0
Alpha 0.93 0
Beta 0.48 0
Sharpe Ratio 0.97 0
Treynor Ratio 4.75 0

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

The iShares MSCI USA Value Factor ETF (VLUE) has a Alpha of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Beta is 0 while VLUE’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a R-squared of 0.

VCSH’s Mean Return is 0.24 points higher than that of VLUE and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than VLUE. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than VLUE’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. VLUE - Annual Returns

Year VCSH VLUE
2020 5.08% -0.32%
2019 6.85% 27.47%
2018 0.91% -11.18%
2017 2.45% 21.97%
2016 2.63% 15.68%
2015 1.25% -3.54%
2014 1.96% 12.29%
2013 1.37% 0.0%
2012 5.74% 0.0%
2011 2.94% 0.0%
2010 5.51% 0.0%

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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VCSH vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $12,298 3.12%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in VCSH would have resulted in a final balance of $12,298. This is a profit of $2,298 over 7 years and amounts to a compound annual growth rate (CAGR) of 3.12%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VCSH’s CAGR is 5.79 percentage points lower than that of VLUE and as a result, would have yielded $4,949 less on a $10,000 investment. Thus, VCSH performed worse than VLUE by 5.79% annually.


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