The Vanguard Real Estate Index Fund ETF Shares (VNQ) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. VNQ is a Vanguard Real Estate fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between VNQ and BSV? And which fund is better?
The expense ratio of VNQ is 0.07 percentage points higher than BSV’s (0.12% vs. 0.05%). VNQ also has a high exposure to the real estate sector while BSV is mostly comprised of AAA bonds. Overall, VNQ has provided higher returns than BSV over the past ten years.
In this article, we’ll compare VNQ vs. BSV. We’ll look at industry exposure and annual returns, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VNQ’s and BSV’s risk metrics, holdings, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Real Estate Index Fund ETF Shares||Vanguard Short-Term Bond Index Fund ETF Shares|
|Category||Real Estate||Short-Term Bond|
The Vanguard Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
VNQ’s dividend yield is 0.86% higher than that of BSV (2.34% vs. 1.48%). Also, VNQ yielded on average 8.78% more per year over the past decade (11.05% vs. 2.27%). The expense ratio of VNQ is 0.07 percentage points higher than BSV’s (0.12% vs. 0.05%).
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|Vanguard Real Estate II Index||11.62%|
|American Tower Corp||7.24%|
|Crown Castle International Corp||5.01%|
|Simon Property Group Inc||2.52%|
|Digital Realty Trust Inc||2.49%|
|SBA Communications Corp||2.1%|
VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.
Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a Sharpe Ratio of 0.62 with a Beta of 0.76 and a Standard Deviation of 16.13. Its Mean Return is 0.89 while VNQ’s Treynor Ratio is 11.9. Furthermore, the fund has a Alpha of 2.47 and a R-squared of 44.4.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Alpha of 0.21 with a Standard Deviation of 1.33 and a Sharpe Ratio of 0.98. Its Mean Return is 0.16 while BSV’s R-squared is 78.38. Furthermore, the fund has a Beta of 0.38 and a Treynor Ratio of 3.33.
VNQ’s Mean Return is 0.73 points higher than that of BSV and its R-squared is 33.98 points lower. With a Standard Deviation of 16.13, VNQ is slightly more volatile than BSV. The Alpha and Beta of VNQ are 2.26 points higher and 0.38 points higher than BSV’s Alpha and Beta.
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VNQ had its best year in 2014 with an annual return of 30.29%. VNQ’s worst year over the past decade yielded -5.95% and occurred in 2018. In most years the Vanguard Real Estate Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 4.95%, 8.53%, and 8.62% respectively.
The year 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VNQ would have resulted in a final balance of $29,506. This is a profit of $19,506 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.05%.
With a $10,000 investment in BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
VNQ’s CAGR is 8.78 percentage points higher than that of BSV and as a result, would have yielded $16,721 more on a $10,000 investment. Thus, VNQ outperformed BSV by 8.78% annually.
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