VCIT or VCSH

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Erwin
Posts: 1929
Joined: Fri Apr 27, 2007 11:16 pm

VCIT or VCSH

Post by Erwin » Mon Jan 04, 2016 12:40 pm

For a corporate bond investment, I am looking at two different options, Vanguard Short Term Corporate Bond ETF (VCSH) and Vanguard Intermediate Term Corporate Bond ETF (VCIT). This is long term money, and I am not interested in the Total Bond Fund, since I already have a huge dose of government bonds (TIPS) in a 10 year+ ladder.
What is the preference of the forum?


By the way, I live overseas, thus Fidelity, and I believe all other brokerage firms, do not allow me to invest in US base mutual funds, no matter that I am a US citizen. Crazy, right?
Erwin

staybalanced
Posts: 321
Joined: Wed Jan 14, 2015 7:36 am

Re: VCIT or VCSH

Post by staybalanced » Mon Jan 04, 2016 12:42 pm

mpt follower wrote:For a corporate bond investment, I am looking at two different options, Vanguard Short Term Corporate Bond ETF (VCSH) and Vanguard Intermediate Term Corporate Bond ETF (VCIT). This is long term money, and I am not interested in the Total Bond Fund, since I already have a huge dose of government bonds (TIPS) in a 10 year+ ladder.
What is the preference of the forum?


By the way, I live overseas, thus Fidelity, and I believe all other brokerage firms, do not allow me to invest in US base mutual funds, no matter that I am a US citizen. Crazy, right?
If this is long term money then I can't see why you wouldn't go with VCIT, if you hold long term it is highly likely to generate more total return.

Karamatsu
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Joined: Mon Oct 27, 2008 2:42 am

Re: VCIT or VCSH

Post by Karamatsu » Thu Jan 07, 2016 9:30 pm

For what it's worth, I'm using VCIT. The yield on VCSH isn't that much better than a CD, so with all the usual caveats about rising interest rates, there doesn't seem to be much point if you're looking at a longterm investment.

As for the mutual funds, you're right. US brokers typically won't allow a nonresident to purchase US mutual funds. At the same time, you need to be extremely careful about investing in local (host country) mutual funds, because they will fall within the IRS rules for passive foreign investment companies (PFIC). The joys of expatriate life! In a few years we probably won't be able to invest at all...

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David Jay
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Location: Michigan

Re: VCIT or VCSH

Post by David Jay » Thu Jan 07, 2016 10:30 pm

My bonds are 2/3 Total Bond (BND) and 1/3 VCIT. I added VCIT because Total Bond is heavily weighted towards government issues.

VCIT is intermediate term, so it should work well, even in a rising interest rate environment if your investment horizon is more than 6-7 years.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

nyblitz
Posts: 354
Joined: Mon Apr 09, 2007 7:33 am

Re: VCIT or VCSH

Post by nyblitz » Fri Jan 08, 2016 9:23 am

Either would be a great choices. Maybe some of each?

As you mention Fidelity, LQD may also be a good option to consider.

Good luck!

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