Skip to content

VTI vs. VCSH: What’s The Difference?

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

VTIVCSH
NameVanguard Total Stock Market Index Fund ETF SharesVanguard Short-Term Corporate Bond Index Fund ETF Shares
CategoryLarge BlendShort-Term Bond
IssuerVanguardVanguard
AUM1.26T47.88B
Avg. Return14.70%3.12%
Div. Yield1.26%1.89%
Expense Ratio0.03%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

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%.

VCSH - Holdings

VCSH Bond SectorsWeight
BBB47.49%
A43.06%
AA8.45%
AAA0.95%
Below B0.03%
Others0.02%
B0.0%
BB0.0%
US Government0.0%

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

VTIVCSH
Mean Return1.230.24
R-squared99.2437.53
Std. Deviation14.152.34
Alpha-0.570.93
Beta1.040.48
Sharpe Ratio10.97
Treynor Ratio13.584.75

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

VTI vs. VCSH - Annual Returns

YearVTIVCSH
202020.95%5.08%
201930.8%6.85%
2018-5.13%0.91%
201721.16%2.45%
201612.68%2.63%
20150.4%1.25%
201412.56%1.96%
201333.51%1.37%
201216.41%5.74%
20111.06%2.94%
201017.26%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

VTI vs. VCSH - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTI$10,000$36,37014.70%
VCSH$10,000$13,5693.12%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Marvin Allen

Leave a Reply

Your email address will not be published. Required fields are marked *