vcsh vs. vfstx [Short Term Corp. vs. Investment Grade Bond]

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devotee
Posts: 42
Joined: Thu Jan 17, 2013 1:13 pm

vcsh vs. vfstx [Short Term Corp. vs. Investment Grade Bond]

Post by devotee »

Any thoughts on which would be the better short-term bond vehicle? The ETF VCSH has a slightly better yield (1.15% vs. 1.03%) and expense ratio (0.12% vs. 0.20%). The mutual fund VFSTX has a lower duration (2.3 vs. 2.9) and is more diversified beyond simply U.S. corporate bonds (some treasury/agency, some asset backed and some foreign bonds). The ETF has no commission in my Vanguard brokerage account and the mutual fund is, of course, no-load, so that's a wash. Thanks.
otbricki
Posts: 102
Joined: Mon Apr 08, 2013 1:28 pm

Re: vcsh vs. vfstx

Post by otbricki »

VFSTX had a much more significant dip in value than VCSH in 2008.
livesoft
Posts: 86076
Joined: Thu Mar 01, 2007 7:00 pm

Re: vcsh vs. vfstx [Short Term Corp. vs. Investment Grade Bo

Post by livesoft »

There is no way to predict the future, so there is no way to know which one will have higher performance going forward.

The Vanguard short-term bond funds (of which there are at least 4) have performance that tracks the risk of the bonds they hold:
Treasuries = least risk.
Treasuries + everything = less risk
Investment grade corporates + Treasuries = more risk
Corporates = most risk

So you can dial in any risk level you want.

I own VCSH because I want to invest with most risk with a ST bond fund and want to use ETFs.
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Munir
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Re: vcsh vs. vfstx

Post by Munir »

otbricki wrote:VFSTX had a much more significant dip in value than VCSH in 2008.
So what? Did you see what it did in 2009?
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