The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between VCSH and VOE? And which fund is better?
The expense ratio of VCSH is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%). VCSH is mostly comprised of BBB bonds while VOE has a high exposure to the financial services sector. Overall, VCSH has provided lower returns than VOE over the past ten years.
In this article, we’ll compare VCSH vs. VOE. We’ll look at industry exposure and portfolio growth, as well as at their performance and fund composition. Moreover, I’ll also discuss VCSH’s and VOE’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
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!
Summary
| VCSH | VOE | |
| Name | Vanguard Short-Term Corporate Bond Index Fund ETF Shares | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Short-Term Bond | Mid-Cap Value |
| Issuer | Vanguard | Vanguard |
| AUM | 47.88B | 26.78B |
| Avg. Return | 3.12% | 12.52% |
| Div. Yield | 1.89% | 1.87% |
| 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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
VCSH’s dividend yield is 0.02% higher than that of VOE (1.89% vs. 1.87%). Also, VCSH yielded on average 9.41% less per year over the past decade (3.12% vs. 12.52%). The expense ratio of VCSH is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
Fund Composition
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.
| VOE Holdings | Weight |
| Carrier Global Corp Ordinary Shares | 1.28% |
| International Flavors & Fragrances Inc | 1.13% |
| Motorola Solutions Inc | 1.12% |
| Discover Financial Services | 1.09% |
| Welltower Inc | 1.05% |
| Corteva Inc | 0.99% |
| Valero Energy Corp | 0.97% |
| Corning Inc | 0.95% |
| Willis Towers Watson PLC | 0.9% |
| D.R. Horton Inc | 0.89% |
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
Risk Analysis
| VCSH | VOE | |
| Mean Return | 0.24 | 1.05 |
| R-squared | 37.53 | 88.76 |
| Std. Deviation | 2.34 | 15.98 |
| Alpha | 0.93 | -3.77 |
| Beta | 0.48 | 1.11 |
| Sharpe Ratio | 0.97 | 0.75 |
| Treynor Ratio | 4.75 | 10.19 |
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Standard Deviation of 2.34 with a Mean Return of 0.24 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 Treynor Ratio of 4.75 and a Alpha of 0.93.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Treynor Ratio of 10.19 with a Standard Deviation of 15.98 and a R-squared of 88.76. Its Beta is 1.11 while VOE’s Sharpe Ratio is 0.75. Furthermore, the fund has a Mean Return of 1.05 and a Alpha of -3.77.
VCSH’s Mean Return is 0.81 points lower than that of VOE and its R-squared is 51.23 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than VOE. The Alpha and Beta of VCSH are 4.70 points higher and 0.63 points lower than VOE’s Alpha and Beta.
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).
Performance
Annual Returns
| Year | VCSH | VOE |
| 2020 | 5.08% | 2.5% |
| 2019 | 6.85% | 27.98% |
| 2018 | 0.91% | -12.41% |
| 2017 | 2.45% | 17.05% |
| 2016 | 2.63% | 15.26% |
| 2015 | 1.25% | -1.8% |
| 2014 | 1.96% | 13.98% |
| 2013 | 1.37% | 37.65% |
| 2012 | 5.74% | 16.04% |
| 2011 | 2.94% | -0.32% |
| 2010 | 5.51% | 21.83% |
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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VCSH | $10,000 | $13,569 | 3.12% |
| VOE | $10,000 | $27,625 | 12.52% |
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 VOE, the end total would have been $27,625. This equates to a $17,625 profit over 10 years and a compound annual growth rate (CAGR) of 12.52%.
VCSH’s CAGR is 9.41 percentage points lower than that of VOE and as a result, would have yielded $14,056 less on a $10,000 investment. Thus, VCSH performed worse than VOE by 9.41% 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)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.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
