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VO vs. BSV: What’s The Difference?

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

The expense ratio of VO is 0.01 percentage points lower than BSV’s (0.04% vs. 0.05%). VO also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, VO has provided higher returns than BSV over the past ten years.

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

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Summary

VOBSV
NameVanguard Mid-Cap Index Fund ETF SharesVanguard Short-Term Bond Index Fund ETF Shares
CategoryMid-Cap BlendShort-Term Bond
IssuerVanguardVanguard
AUM154.08B67.71B
Avg. Return14.34%2.27%
Div. Yield1.23%1.48%
Expense Ratio0.04%0.05%

The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.

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%.

VO’s dividend yield is 0.25% lower than that of BSV (1.23% vs. 1.48%). Also, VO yielded on average 12.06% more per year over the past decade (14.34% vs. 2.27%). The expense ratio of VO is 0.01 percentage points lower than BSV’s (0.04% vs. 0.05%).

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Fund Composition

Holdings

VO - Holdings

VO HoldingsWeight
IDEXX Laboratories Inc0.78%
DocuSign Inc0.75%
Marvell Technology Inc0.68%
IQVIA Holdings Inc0.68%
Chipotle Mexican Grill Inc0.63%
Veeva Systems Inc Class A0.62%
Digital Realty Trust Inc0.62%
Centene Corp0.62%
Aptiv PLC0.62%
Carrier Global Corp Ordinary Shares0.61%

VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.

Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.

BSV - Holdings

BSV Bond SectorsWeight
AAA71.65%
BBB13.08%
A11.95%
AA3.28%
Others0.03%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%

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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Risk Analysis

VOBSV
Mean Return1.140.16
R-squared92.2278.38
Std. Deviation15.651.33
Alpha-2.710.21
Beta1.110.38
Sharpe Ratio0.830.98
Treynor Ratio11.323.33

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Beta of 1.11 with a Mean Return of 1.14 and a R-squared of 92.22. Its Alpha is -2.71 while VO’s Standard Deviation is 15.65. Furthermore, the fund has a Sharpe Ratio of 0.83 and a Treynor Ratio of 11.32.

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Mean Return of 0.16 with a R-squared of 78.38 and a Treynor Ratio of 3.33. Its Sharpe Ratio is 0.98 while BSV’s Standard Deviation is 1.33. Furthermore, the fund has a Alpha of 0.21 and a Beta of 0.38.

VO’s Mean Return is 0.98 points higher than that of BSV and its R-squared is 13.84 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than BSV. The Alpha and Beta of VO are 2.92 points lower and 0.73 points higher than BSV’s Alpha and Beta.

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Performance

Annual Returns

VO vs. BSV - Annual Returns

YearVOBSV
202018.22%4.67%
201931.04%4.92%
2018-9.21%1.34%
201719.25%1.2%
201611.23%1.42%
2015-1.34%0.92%
201413.76%1.32%
201335.15%0.17%
201215.98%1.98%
2011-1.96%3.04%
201025.57%4.0%

VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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.

Portfolio Growth

VO vs. BSV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VO$10,000$40,40414.34%
BSV$10,000$12,7852.27%

A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.

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%.

VO’s CAGR is 12.06 percentage points higher than that of BSV and as a result, would have yielded $27,619 more on a $10,000 investment. Thus, VO outperformed BSV by 12.06% annually.


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