The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VCSH and XLC? And which fund is better?
The expense ratio of VCSH is 0.07 percentage points lower than XLC’s (0.05% vs. 0.12%). VCSH is mostly comprised of BBB bonds while XLC has a high exposure to the communication services sector. Overall, VCSH has provided lower returns than XLC over the past ten years.
In this article, we’ll compare VCSH vs. XLC. We’ll look at fund composition and annual returns, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VCSH’s and XLC’s portfolio growth, performance, and holdings and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||Communication Services Select Sector SPDR Fund|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
VCSH’s dividend yield is 1.27% higher than that of XLC (1.89% vs. 0.62%). Also, VCSH yielded on average 25.92% less per year over the past decade (3.12% vs. 29.04%). The expense ratio of VCSH is 0.07 percentage points lower than XLC’s (0.05% vs. 0.12%).
|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.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|Verizon Communications Inc||4.33%|
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Sharpe Ratio of 0.97 with a Alpha of 0.93 and a Mean Return of 0.24. Its Treynor Ratio is 4.75 while VCSH’s Standard Deviation is 2.34. Furthermore, the fund has a Beta of 0.48 and a R-squared of 37.53.
The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Alpha is 0 while XLC’s Mean Return is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.
VCSH’s Mean Return is 0.24 points higher than that of XLC and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than XLC. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than XLC’s Alpha and Beta.
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 XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VCSH would have resulted in a final balance of $11,227. This is a profit of $1,227 over 2 years and amounts to a compound annual growth rate (CAGR) of 3.12%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
VCSH’s CAGR is 25.92 percentage points lower than that of XLC and as a result, would have yielded $5,418 less on a $10,000 investment. Thus, VCSH performed worse than XLC by 25.92% annually.
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.