The Vanguard Total World Stock Index Fund ETF Shares (VT) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and SHY is a iShares Short Government fund. So, what’s the difference between VT and SHY? And which fund is better?
The expense ratio of VT is 0.07 percentage points lower than SHY’s (0.08% vs. 0.15%). VT also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, VT has provided higher returns than SHY over the past 11 years.
In this article, we’ll compare VT vs. SHY. We’ll look at fund composition and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VT’s and SHY’s portfolio growth, annual returns, and industry exposure and examine how these affect their overall returns.
Summary
| VT | SHY | |
| Name | Vanguard Total World Stock Index Fund ETF Shares | iShares 1-3 Year Treasury Bond ETF |
| Category | N/A | Short Government |
| Issuer | Vanguard | iShares |
| AUM | 30.44B | 19.51B |
| Avg. Return | 10.42% | 1.27% |
| Div. Yield | 1.65% | 0.46% |
| Expense Ratio | 0.08% | 0.15% |
The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
The iShares 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
VT’s dividend yield is 1.19% higher than that of SHY (1.65% vs. 0.46%). Also, VT yielded on average 9.14% more per year over the past decade (10.42% vs. 1.27%). The expense ratio of VT is 0.07 percentage points lower than SHY’s (0.08% vs. 0.15%).
Fund Composition
Holdings
| VT Holdings | Weight |
| Apple Inc | 2.85% |
| Microsoft Corp | 2.71% |
| Amazon.com Inc | 1.98% |
| Facebook Inc Class A | 1.1% |
| Alphabet Inc Class A | 0.97% |
| Alphabet Inc Class C | 0.95% |
| Tesla Inc | 0.7% |
| NVIDIA Corp | 0.64% |
| JPMorgan Chase & Co | 0.62% |
| Tencent Holdings Ltd | 0.6% |
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
| SHY Bond Sectors | Weight |
| AAA | 99.67% |
| Others | 0.33% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| VT | SHY | |
| Mean Return | 0.9 | 0.09 |
| R-squared | 99.35 | 39.11 |
| Std. Deviation | 14.19 | 0.89 |
| Alpha | 0.2 | -0.03 |
| Beta | 1.01 | 0.18 |
| Sharpe Ratio | 0.71 | 0.54 |
| Treynor Ratio | 9.5 | 2.6 |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Standard Deviation of 14.19 and a Alpha of 0.2. Its Sharpe Ratio is 0.71 while VT’s Mean Return is 0.9. Furthermore, the fund has a R-squared of 99.35 and a Treynor Ratio of 9.5.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Alpha of -0.03 with a Sharpe Ratio of 0.54 and a Standard Deviation of 0.89. Its R-squared is 39.11 while SHY’s Treynor Ratio is 2.6. Furthermore, the fund has a Beta of 0.18 and a Mean Return of 0.09.
VT’s Mean Return is 0.81 points higher than that of SHY and its R-squared is 60.24 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than SHY. The Alpha and Beta of VT are 0.23 points higher and 0.83 points higher than SHY’s Alpha and Beta.
Performance
Annual Returns
| Year | VT | SHY |
| 2020 | 16.74% | 3.01% |
| 2019 | 26.8% | 3.42% |
| 2018 | -9.67% | 1.45% |
| 2017 | 24.19% | 0.27% |
| 2016 | 8.77% | 0.75% |
| 2015 | -1.88% | 0.43% |
| 2014 | 3.97% | 0.48% |
| 2013 | 22.98% | 0.23% |
| 2012 | 17.33% | 0.31% |
| 2011 | -7.71% | 1.43% |
| 2010 | 13.05% | 2.23% |
VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% respectively.
The year 2019 was the strongest year for SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VT | $10,000 | $27,739 | 10.42% |
| SHY | $10,000 | $11,486 | 1.27% |
A $10,000 investment in VT would have resulted in a final balance of $27,739. This is a profit of $17,739 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.42%.
With a $10,000 investment in SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.
VT’s CAGR is 9.14 percentage points higher than that of SHY and as a result, would have yielded $16,253 more on a $10,000 investment. Thus, VT outperformed SHY by 9.14% annually.
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