The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between VTI and VCIT? And which fund is better?
The expense ratio of VTI is 0.02 percentage points lower than VCIT’s (0.03% vs. 0.05%). VTI also has a high exposure to the technology sector while VCIT is mostly comprised of BBB bonds. Overall, VTI has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare VTI vs. VCIT. We’ll look at industry exposure and risk metrics, as well as at their performance and holdings. Moreover, I’ll also discuss VTI’s and VCIT’s portfolio growth, fund composition, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Total Stock Market Index Fund ETF Shares||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares|
|Category||Large Blend||Corporate Bond|
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 Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
VTI’s dividend yield is 1.07% lower than that of VCIT (1.26% vs. 2.33%). Also, VTI yielded on average 8.85% more per year over the past decade (14.70% vs. 5.84%). The expense ratio of VTI is 0.02 percentage points lower than VCIT’s (0.03% vs. 0.05%).
|Facebook Inc Class A||1.88%|
|Alphabet Inc Class A||1.66%|
|Alphabet Inc Class C||1.56%|
|Berkshire Hathaway Inc Class B||1.09%|
|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%.
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
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 VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTI would have resulted in a final balance of $36,370. This is a profit of $26,370 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
VTI’s CAGR is 8.85 percentage points higher than that of VCIT and as a result, would have yielded $18,931 more on a $10,000 investment. Thus, VTI outperformed VCIT by 8.85% annually.
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