The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between VXUS and VCIT? And which fund is better?
The expense ratio of VXUS is 0.03 percentage points higher than VCIT’s (0.08% vs. 0.05%). VXUS also has a high exposure to the financial services sector while VCIT is mostly comprised of BBB bonds. Overall, VXUS has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare VXUS vs. VCIT. We’ll look at portfolio growth and industry exposure, as well as at their performance and risk metrics. Moreover, I’ll also discuss VXUS’s and VCIT’s annual returns, fund composition, and holdings and examine how these affect their overall returns.
|Name||Vanguard Total International Stock Index Fund ETF Shares||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares|
|Category||Foreign Large Blend||Corporate Bond|
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 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%.
VXUS’s dividend yield is 0.11% higher than that of VCIT (2.44% vs. 2.33%). Also, VXUS yielded on average 2.56% more per year over the past decade (8.41% vs. 5.84%). The expense ratio of VXUS is 0.03 percentage points higher than VCIT’s (0.08% vs. 0.05%).
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|Taiwan Semiconductor Manufacturing Co Ltd||1.62%|
|Tencent Holdings Ltd||1.41%|
|Alibaba Group Holding Ltd Ordinary Shares||1.26%|
|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%|
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%.
|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.
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The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Beta of 0.99 with a Alpha of 0.31 and a Mean Return of 0.56. Its Standard Deviation is 15.12 while VXUS’s Treynor Ratio is 5.14. Furthermore, the fund has a Sharpe Ratio of 0.4 and a R-squared of 98.39.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Alpha of 0.89 with a Treynor Ratio of 3.43 and a Standard Deviation of 5.08. Its Mean Return is 0.44 while VCIT’s Beta is 1.35. Furthermore, the fund has a Sharpe Ratio of 0.91 and a R-squared of 63.18.
VXUS’s Mean Return is 0.12 points higher than that of VCIT and its R-squared is 35.21 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than VCIT. The Alpha and Beta of VXUS are 0.58 points lower and 0.36 points lower than VCIT’s Alpha and Beta.
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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 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 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 VCIT, the end total would have been $16,156. This equates to a $6,156 profit over 9 years and a compound annual growth rate (CAGR) of 5.84%.
VXUS’s CAGR is 2.56 percentage points higher than that of VCIT and as a result, would have yielded $3,159 more on a $10,000 investment. Thus, VXUS outperformed VCIT by 2.56% annually.
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