VCSH vs. VXF: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between VCSH and VXF? And which fund is better?

The expense ratio of VCSH is 0.01 percentage points lower than VXF’s (0.05% vs. 0.06%). VCSH is mostly comprised of BBB bonds while VXF has a high exposure to the technology sector. Overall, VCSH has provided lower returns than VXF over the past ten years.

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

Summary

VCSH VXF
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Vanguard Extended Market Index Fund ETF Shares
Category Short-Term Bond Mid-Cap Growth
Issuer Vanguard Vanguard
AUM 47.88B 114.53B
Avg. Return 3.12% 15.47%
Div. Yield 1.89% 1.19%
Expense Ratio 0.05% 0.06%

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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

VCSH’s dividend yield is 0.70% higher than that of VXF (1.89% vs. 1.19%). Also, VCSH yielded on average 12.35% less per year over the past decade (3.12% vs. 15.47%). The expense ratio of VCSH is 0.01 percentage points lower than VXF’s (0.05% vs. 0.06%).

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.

VXF - Holdings

VXF Holdings Weight
Square Inc A 1.2%
Zoom Video Communications Inc 1.04%
Uber Technologies Inc 0.93%
Moderna Inc 0.9%
Blackstone Group Inc 0.83%
Snap Inc Class A 0.8%
Twilio Inc A 0.73%
DocuSign Inc 0.68%
CrowdStrike Holdings Inc Class A 0.63%
Marvell Technology Inc 0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

Risk Analysis

VCSH VXF
Mean Return 0.24 1.24
R-squared 37.53 85.73
Std. Deviation 2.34 18.04
Alpha 0.93 -3.26
Beta 0.48 1.23
Sharpe Ratio 0.97 0.79
Treynor Ratio 4.75 10.92

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

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Alpha of -3.26 with a Treynor Ratio of 10.92 and a Standard Deviation of 18.04. Its Sharpe Ratio is 0.79 while VXF’s Mean Return is 1.24. Furthermore, the fund has a R-squared of 85.73 and a Beta of 1.23.

VCSH’s Mean Return is 1.00 points lower than that of VXF and its R-squared is 48.20 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than VXF. The Alpha and Beta of VCSH are 4.19 points higher and 0.75 points lower than VXF’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. VXF - Annual Returns

Year VCSH VXF
2020 5.08% 32.19%
2019 6.85% 28.04%
2018 0.91% -9.37%
2017 2.45% 18.1%
2016 2.63% 16.16%
2015 1.25% -3.26%
2014 1.96% 7.55%
2013 1.37% 38.37%
2012 5.74% 18.48%
2011 2.94% -3.61%
2010 5.51% 27.55%

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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

VCSH vs. VXF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
VXF $10,000 $34,598 15.47%

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 VXF, the end total would have been $34,598. This equates to a $24,598 profit over 10 years and a compound annual growth rate (CAGR) of 15.47%.

VCSH’s CAGR is 12.35 percentage points lower than that of VXF and as a result, would have yielded $21,029 less on a $10,000 investment. Thus, VCSH performed worse than VXF by 12.35% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply