The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VXUS and IGSB? And which fund is better?
The expense ratio of VXUS is 0.02 percentage points higher than IGSB’s (0.08% vs. 0.06%). VXUS also has a high exposure to the financial services sector while IGSB is mostly comprised of BBB bonds. Overall, VXUS has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare VXUS vs. IGSB. We’ll look at holdings and portfolio growth, as well as at their industry exposure and performance. Moreover, I’ll also discuss VXUS’s and IGSB’s risk metrics, annual returns, and fund composition and examine how these affect their overall returns.
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Summary
| VXUS | IGSB | |
| NameVanguard Total International Stock Index Fund ETF SharesiShares 1-5 Year Investment Grade Corporate Bond ETF | ||
| Category | Foreign Large Blend | Short-Term Bond |
| Issuer | Vanguard | iShares |
| AUM | 404.73B | 26.63B |
| Avg. Return | 8.41% | 2.51% |
| Div. Yield | 2.44% | 2.02% |
| Expense Ratio | 0.08% | 0.06% |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
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%.
VXUS’s dividend yield is 0.42% higher than that of IGSB (2.44% vs. 2.02%). Also, VXUS yielded on average 5.90% more per year over the past decade (8.41% vs. 2.51%). The expense ratio of VXUS is 0.02 percentage points higher than IGSB’s (0.08% vs. 0.06%).
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Fund Composition
Holdings
| VXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.62% |
| Tencent Holdings Ltd | 1.41% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.26% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.05% |
| ASML Holding NV | 0.86% |
| Roche Holding AG | 0.81% |
| Toyota Motor Corp | 0.67% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.61% |
| Novartis AG | 0.6% |
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| 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.
Risk Analysis
| VXUS | IGSB | |
| Mean Return | 0.56 | 0.19 |
| R-squared | 98.39 | 26.13 |
| Std. Deviation | 15.12 | 2 |
| Alpha | 0.31 | 0.69 |
| Beta | 0.99 | 0.34 |
| Sharpe Ratio | 0.4 | 0.82 |
| Treynor Ratio | 5.14 | 4.82 |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Beta of 0.99 with a Sharpe Ratio of 0.4 and a Alpha of 0.31. Its R-squared is 98.39 while VXUS’s Mean Return is 0.56. Furthermore, the fund has a Standard Deviation of 15.12 and a Treynor Ratio of 5.14.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a R-squared of 26.13 with a Treynor Ratio of 4.82 and a Mean Return of 0.19. Its Alpha is 0.69 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a Standard Deviation of 2 and a Beta of 0.34.
VXUS’s Mean Return is 0.37 points higher than that of IGSB and its R-squared is 72.26 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than IGSB. The Alpha and Beta of VXUS are 0.38 points lower and 0.65 points higher than IGSB’s Alpha and Beta.
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Performance
Annual Returns
| Year | VXUS | IGSB |
| 2020 | 11.32% | 5.26% |
| 2019 | 21.58% | 7.01% |
| 2018 | -14.42% | 1.34% |
| 2017 | 27.52% | 1.41% |
| 2016 | 4.72% | 1.77% |
| 2015 | -4.28% | 0.7% |
| 2014 | -4.17% | 0.74% |
| 2013 | 15.16% | 1.03% |
| 2012 | 18.22% | 3.28% |
| 2011 | 0.0% | 1.34% |
| 2010 | 0.0% | 3.69% |
VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VXUS | $10,000 | $19,315 | 8.41% |
| IGSB | $10,000 | $12,470 | 2.51% |
A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in IGSB, the end total would have been $12,470. This equates to a $2,470 profit over 9 years and a compound annual growth rate (CAGR) of 2.51%.
VXUS’s CAGR is 5.90 percentage points higher than that of IGSB and as a result, would have yielded $6,845 more on a $10,000 investment. Thus, VXUS outperformed IGSB by 5.90% annually.
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