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VTI vs. IGSB: What’s The Difference?

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VTI and IGSB? And which fund is better?

The expense ratio of VTI is 0.03 percentage points lower than IGSB’s (0.03% vs. 0.06%). VTI also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, VTI has provided higher returns than IGSB over the past ten years.

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

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Summary

VTIIGSB
NameVanguard Total Stock Market Index Fund ETF SharesiShares 1-5 Year Investment Grade Corporate Bond ETF
CategoryLarge BlendShort-Term Bond
IssuerVanguardiShares
AUM1.26T26.63B
Avg. Return14.70%2.51%
Div. Yield1.26%2.02%
Expense Ratio0.03%0.06%

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 iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

VTI’s dividend yield is 0.76% lower than that of IGSB (1.26% vs. 2.02%). Also, VTI yielded on average 12.19% more per year over the past decade (14.70% vs. 2.51%). The expense ratio of VTI is 0.03 percentage points lower than IGSB’s (0.03% vs. 0.06%).

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Fund Composition

Holdings

VTI - Holdings

VTI HoldingsWeight
Apple Inc4.9%
Microsoft Corp4.6%
Amazon.com Inc3.33%
Facebook Inc Class A1.88%
Alphabet Inc Class A1.66%
Alphabet Inc Class C1.56%
Tesla Inc1.18%
Berkshire Hathaway Inc Class B1.09%
NVIDIA Corp1.07%
JPMorgan Chase & Co1.06%

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%.

IGSB - Holdings

IGSB Bond SectorsWeight
BBB50.48%
A40.04%
AA7.46%
AAA2.21%
BB0.09%
Below B0.0%
B0.0%
US Government0.0%
Others-0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

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Performance

Annual Returns

VTI vs. IGSB - Annual Returns

YearVTIIGSB
202020.95%5.26%
201930.8%7.01%
2018-5.13%1.34%
201721.16%1.41%
201612.68%1.77%
20150.4%0.7%
201412.56%0.74%
201333.51%1.03%
201216.41%3.28%
20111.06%1.34%
201017.26%3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

VTI vs. IGSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTI$10,000$42,64814.70%
IGSB$10,000$13,1032.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

VTI’s CAGR is 12.19 percentage points higher than that of IGSB and as a result, would have yielded $29,545 more on a $10,000 investment. Thus, VTI outperformed IGSB by 12.19% annually.


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