The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and VCSH is a Vanguard Short-Term Bond fund. So, what’s the difference between VXUS and VCSH? And which fund is better?
The expense ratio of VXUS is 0.03 percentage points higher than VCSH’s (0.08% vs. 0.05%). VXUS also has a high exposure to the financial services sector while VCSH is mostly comprised of BBB bonds. Overall, VXUS has provided higher returns than VCSH over the past ten years.
In this article, we’ll compare VXUS vs. VCSH. We’ll look at annual returns and performance, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VXUS’s and VCSH’s holdings, fund composition, and portfolio growth and examine how these affect their overall returns.
Summary
| VXUS | VCSH | |
| Name | Vanguard Total International Stock Index Fund ETF Shares | Vanguard Short-Term Corporate Bond Index Fund ETF Shares |
| Category | Foreign Large Blend | Short-Term Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 404.73B | 47.88B |
| Avg. Return | 8.41% | 3.12% |
| Div. Yield | 2.44% | 1.89% |
| Expense Ratio | 0.08% | 0.05% |
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 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%.
VXUS’s dividend yield is 0.55% higher than that of VCSH (2.44% vs. 1.89%). Also, VXUS yielded on average 5.29% more per year over the past decade (8.41% vs. 3.12%). The expense ratio of VXUS is 0.03 percentage points higher than VCSH’s (0.08% vs. 0.05%).
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%.
| 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
| VXUS | VCSH | |
| Mean Return | 0.56 | 0.24 |
| R-squared | 98.39 | 37.53 |
| Std. Deviation | 15.12 | 2.34 |
| Alpha | 0.31 | 0.93 |
| Beta | 0.99 | 0.48 |
| Sharpe Ratio | 0.4 | 0.97 |
| Treynor Ratio | 5.14 | 4.75 |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Alpha of 0.31 with a Treynor Ratio of 5.14 and a Beta of 0.99. Its Standard Deviation is 15.12 while VXUS’s Mean Return is 0.56. Furthermore, the fund has a Sharpe Ratio of 0.4 and a R-squared of 98.39.
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Sharpe Ratio of 0.97 with a R-squared of 37.53 and a Standard Deviation of 2.34. Its Treynor Ratio is 4.75 while VCSH’s Alpha is 0.93. Furthermore, the fund has a Mean Return of 0.24 and a Beta of 0.48.
VXUS’s Mean Return is 0.32 points higher than that of VCSH and its R-squared is 60.86 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than VCSH. The Alpha and Beta of VXUS are 0.62 points lower and 0.51 points higher than VCSH’s Alpha and Beta.
Performance
Annual Returns
| Year | VXUS | VCSH |
| 2020 | 11.32% | 5.08% |
| 2019 | 21.58% | 6.85% |
| 2018 | -14.42% | 0.91% |
| 2017 | 27.52% | 2.45% |
| 2016 | 4.72% | 2.63% |
| 2015 | -4.28% | 1.25% |
| 2014 | -4.17% | 1.96% |
| 2013 | 15.16% | 1.37% |
| 2012 | 18.22% | 5.74% |
| 2011 | 0.0% | 2.94% |
| 2010 | 0.0% | 5.51% |
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 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 |
| VXUS | $10,000 | $19,315 | 8.41% |
| VCSH | $10,000 | $13,182 | 3.12% |
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 VCSH, the end total would have been $13,182. This equates to a $3,182 profit over 9 years and a compound annual growth rate (CAGR) of 3.12%.
VXUS’s CAGR is 5.29 percentage points higher than that of VCSH and as a result, would have yielded $6,133 more on a $10,000 investment. Thus, VXUS outperformed VCSH by 5.29% annually.
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