The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between VUG and BSV? And which fund is better?
The expense ratio of VUG is 0.01 percentage points lower than BSV’s (0.04% vs. 0.05%). VUG also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, VUG has provided higher returns than BSV over the past ten years.
In this article, we’ll compare VUG vs. BSV. We’ll look at portfolio growth and performance, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VUG’s and BSV’s holdings, risk metrics, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Short-Term Bond Index Fund ETF Shares|
|Category||Large Growth||Short-Term Bond|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.
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%.
VUG’s dividend yield is 0.91% lower than that of BSV (0.57% vs. 1.48%). Also, VUG yielded on average 15.31% more per year over the past decade (17.58% vs. 2.27%). The expense ratio of VUG is 0.01 percentage points lower than BSV’s (0.04% vs. 0.05%).
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|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|BSV Bond Sectors||Weight|
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.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Sharpe Ratio of 1.13 and a R-squared of 92.48. Its Mean Return is 1.44 while VUG’s Treynor Ratio is 16.13. Furthermore, the fund has a Standard Deviation of 14.76 and a Beta of 1.04.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Treynor Ratio of 3.33 with a Mean Return of 0.16 and a Beta of 0.38. Its Alpha is 0.21 while BSV’s Standard Deviation is 1.33. Furthermore, the fund has a Sharpe Ratio of 0.98 and a R-squared of 78.38.
VUG’s Mean Return is 1.28 points higher than that of BSV and its R-squared is 14.10 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than BSV. The Alpha and Beta of VUG are 1.60 points higher and 0.66 points higher than BSV’s Alpha and Beta.
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VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
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%.
VUG’s CAGR is 15.31 percentage points higher than that of BSV and as a result, would have yielded $41,950 more on a $10,000 investment. Thus, VUG outperformed BSV by 15.31% annually.
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