The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between VTI and BSV? And which fund is better?
The expense ratio of VTI is 0.02 percentage points lower than BSV’s (0.03% vs. 0.05%). VTI also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than BSV over the past ten years.
In this article, we’ll compare VTI vs. BSV. We’ll look at industry exposure and portfolio growth, as well as at their annual returns and performance. Moreover, I’ll also discuss VTI’s and BSV’s risk metrics, holdings, and fund composition and examine how these affect their overall returns.
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Summary
| VTI | BSV | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | Vanguard Short-Term Bond Index Fund ETF Shares |
| Category | Large Blend | Short-Term Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 1.26T | 67.71B |
| Avg. Return | 14.70% | 2.27% |
| Div. Yield | 1.26% | 1.48% |
| Expense Ratio | 0.03% | 0.05% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
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%.
VTI’s dividend yield is 0.22% lower than that of BSV (1.26% vs. 1.48%). Also, VTI yielded on average 12.43% more per year over the past decade (14.70% vs. 2.27%). The expense ratio of VTI is 0.02 percentage points lower than BSV’s (0.03% vs. 0.05%).
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Fund Composition
Holdings
| VTI Holdings | Weight |
| Apple Inc | 4.9% |
| Microsoft Corp | 4.6% |
| Amazon.com Inc | 3.33% |
| Facebook Inc Class A | 1.88% |
| Alphabet Inc Class A | 1.66% |
| Alphabet Inc Class C | 1.56% |
| Tesla Inc | 1.18% |
| Berkshire Hathaway Inc Class B | 1.09% |
| NVIDIA Corp | 1.07% |
| JPMorgan Chase & Co | 1.06% |
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
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.
Risk Analysis
| VTI | BSV | |
| Mean Return | 1.23 | 0.16 |
| R-squared | 99.24 | 78.38 |
| Std. Deviation | 14.15 | 1.33 |
| Alpha | -0.57 | 0.21 |
| Beta | 1.04 | 0.38 |
| Sharpe Ratio | 1 | 0.98 |
| Treynor Ratio | 13.58 | 3.33 |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has a Sharpe Ratio of 1 with a Standard Deviation of 14.15 and a Alpha of -0.57. Its Mean Return is 1.23 while VTI’s Treynor Ratio is 13.58. Furthermore, the fund has a R-squared of 99.24 and a Beta of 1.04.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a R-squared of 78.38 with a Standard Deviation of 1.33 and a Treynor Ratio of 3.33. Its Mean Return is 0.16 while BSV’s Sharpe Ratio is 0.98. Furthermore, the fund has a Beta of 0.38 and a Alpha of 0.21.
VTI’s Mean Return is 1.07 points higher than that of BSV and its R-squared is 20.86 points higher. With a Standard Deviation of 14.15, VTI is slightly more volatile than BSV. The Alpha and Beta of VTI are 0.78 points lower and 0.66 points higher than BSV’s Alpha and Beta.
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Performance
Annual Returns
| Year | VTI | BSV |
| 2020 | 20.95% | 4.67% |
| 2019 | 30.8% | 4.92% |
| 2018 | -5.13% | 1.34% |
| 2017 | 21.16% | 1.2% |
| 2016 | 12.68% | 1.42% |
| 2015 | 0.4% | 0.92% |
| 2014 | 12.56% | 1.32% |
| 2013 | 33.51% | 0.17% |
| 2012 | 16.41% | 1.98% |
| 2011 | 1.06% | 3.04% |
| 2010 | 17.26% | 4.0% |
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $42,648 | 14.70% |
| BSV | $10,000 | $12,785 | 2.27% |
A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
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%.
VTI’s CAGR is 12.43 percentage points higher than that of BSV and as a result, would have yielded $29,863 more on a $10,000 investment. Thus, VTI outperformed BSV by 12.43% annually.
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