The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between VO and VCSH? And which fund is better?
The expense ratio of VO is 0.01 percentage points lower than VCSH’s (0.04% vs. 0.05%). VO also has a high exposure to the technology sector while VCSH is mostly comprised of BBB bonds. Overall, VO has provided higher returns than VCSH over the past ten years.
In this article, we’ll compare VO vs. VCSH. We’ll look at risk metrics and industry exposure, as well as at their holdings and performance. Moreover, I’ll also discuss VO’s and VCSH’s fund composition, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Short-Term Corporate Bond Index Fund ETF Shares|
|Category||Mid-Cap Blend||Short-Term Bond|
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 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%.
VO’s dividend yield is 0.66% lower than that of VCSH (1.23% vs. 1.89%). Also, VO yielded on average 11.22% more per year over the past decade (14.34% vs. 3.12%). The expense ratio of VO is 0.01 percentage points lower than VCSH’s (0.04% vs. 0.05%).
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|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
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%.
|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.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Treynor Ratio of 11.32 with a Alpha of -2.71 and a Mean Return of 1.14. Its Sharpe Ratio is 0.83 while VO’s R-squared is 92.22. Furthermore, the fund has a Beta of 1.11 and a Standard Deviation of 15.65.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Mean Return of 0.24 with a Alpha of 0.93 and a Standard Deviation of 2.34. Its Sharpe Ratio is 0.97 while VCSH’s Beta is 0.48. Furthermore, the fund has a R-squared of 37.53 and a Treynor Ratio of 4.75.
VO’s Mean Return is 0.90 points higher than that of VCSH and its R-squared is 54.69 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than VCSH. The Alpha and Beta of VO are 3.64 points lower and 0.63 points higher than VCSH’s Alpha and Beta.
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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 VCSH, returning 6.85% on an annual basis. The poorest year for VCSH in the last ten years was 2018, with a yield of 0.91%. Most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2016, and 2011, when gains were 2.45%, 2.63%, and 2.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $32,177. This is a profit of $22,177 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
With a $10,000 investment in VCSH, the end total would have been $13,569. This equates to a $3,569 profit over 10 years and a compound annual growth rate (CAGR) of 3.12%.
VO’s CAGR is 11.22 percentage points higher than that of VCSH and as a result, would have yielded $18,608 more on a $10,000 investment. Thus, VO outperformed VCSH by 11.22% annually.
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