The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between VTI and VCSH? And which fund is better?
The expense ratio of VTI is 0.02 percentage points lower than VCSH’s (0.03% vs. 0.05%). VTI also has a high exposure to the technology sector while VCSH is mostly comprised of BBB bonds. Overall, VTI has provided higher returns than VCSH over the past ten years.
In this article, we’ll compare VTI vs. VCSH. We’ll look at portfolio growth and annual returns, as well as at their industry exposure and holdings. Moreover, I’ll also discuss VTI’s and VCSH’s fund composition, performance, and risk metrics and examine how these affect their overall returns.
Summary
| VTI | VCSH | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | Vanguard Short-Term Corporate Bond Index Fund ETF Shares |
| Category | Large Blend | Short-Term Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 1.26T | 47.88B |
| Avg. Return | 14.70% | 3.12% |
| Div. Yield | 1.26% | 1.89% |
| 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 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%.
VTI’s dividend yield is 0.63% lower than that of VCSH (1.26% vs. 1.89%). Also, VTI yielded on average 11.58% more per year over the past decade (14.70% vs. 3.12%). The expense ratio of VTI is 0.02 percentage points lower than VCSH’s (0.03% vs. 0.05%).
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%.
| VCSH Bond Sectors | Weight |
| BBB | 47.49% |
| A | 43.06% |
| AA | 8.45% |
| AAA | 0.95% |
| Below B | 0.03% |
| Others | 0.02% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
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.
Risk Analysis
| VTI | VCSH | |
| Mean Return | 1.23 | 0.24 |
| R-squared | 99.24 | 37.53 |
| Std. Deviation | 14.15 | 2.34 |
| Alpha | -0.57 | 0.93 |
| Beta | 1.04 | 0.48 |
| Sharpe Ratio | 1 | 0.97 |
| Treynor Ratio | 13.58 | 4.75 |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has a Sharpe Ratio of 1 with a Alpha of -0.57 and a Beta of 1.04. Its R-squared is 99.24 while VTI’s Mean Return is 1.23. Furthermore, the fund has a Standard Deviation of 14.15 and a Treynor Ratio of 13.58.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Mean Return of 0.24 with a R-squared of 37.53 and a Alpha of 0.93. Its Standard Deviation is 2.34 while VCSH’s Beta is 0.48. Furthermore, the fund has a Treynor Ratio of 4.75 and a Sharpe Ratio of 0.97.
VTI’s Mean Return is 0.99 points higher than that of VCSH and its R-squared is 61.71 points higher. With a Standard Deviation of 14.15, VTI is slightly more volatile than VCSH. The Alpha and Beta of VTI are 1.50 points lower and 0.56 points higher than VCSH’s Alpha and Beta.
Performance
Annual Returns
| Year | VTI | VCSH |
| 2020 | 20.95% | 5.08% |
| 2019 | 30.8% | 6.85% |
| 2018 | -5.13% | 0.91% |
| 2017 | 21.16% | 2.45% |
| 2016 | 12.68% | 2.63% |
| 2015 | 0.4% | 1.25% |
| 2014 | 12.56% | 1.96% |
| 2013 | 33.51% | 1.37% |
| 2012 | 16.41% | 5.74% |
| 2011 | 1.06% | 2.94% |
| 2010 | 17.26% | 5.51% |
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 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $36,370 | 14.70% |
| VCSH | $10,000 | $13,569 | 3.12% |
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 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%.
VTI’s CAGR is 11.58 percentage points higher than that of VCSH and as a result, would have yielded $22,801 more on a $10,000 investment. Thus, VTI outperformed VCSH by 11.58% annually.
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