The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VCSH and VTIP? And which fund is better?
VCSH and VTIP have the same expense ratio: 0.05%. VCSH is mostly comprised of BBB bonds and VTIP has a high exposure to AAA bond. Overall, VCSH has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare VCSH vs. VTIP. We’ll look at holdings and portfolio growth, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss VCSH’s and VTIP’s industry exposure, performance, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares|
|Category||Short-Term Bond||Inflation-Protected Bond|
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
VCSH’s dividend yield is 0.54% higher than that of VTIP (1.89% vs. 1.35%). Also, VCSH yielded on average 1.33% more per year over the past decade (3.12% vs. 1.79%). VCSH and VTIP have the same expense ratio: 0.05%.
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|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.
|VTIP Bond Sectors||Weight|
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Alpha of 0.93 with a Standard Deviation of 2.34 and a Mean Return of 0.24. Its R-squared is 37.53 while VCSH’s Sharpe Ratio is 0.97. Furthermore, the fund has a Beta of 0.48 and a Treynor Ratio of 4.75.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Standard Deviation of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while VTIP’s Mean Return is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.
VCSH’s Mean Return is 0.24 points higher than that of VTIP and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than VTIP. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than VTIP’s Alpha and Beta.
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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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
VCSH’s CAGR is 1.33 percentage points higher than that of VTIP and as a result, would have yielded $993 more on a $10,000 investment. Thus, VCSH outperformed VTIP by 1.33% annually.
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