The BSV ETF Offers Lower Costs and Larger Scale Than the ISTB ETF
Key Points
BSV is less expensive to own and manages much more in assets than ISTB
ISTB delivered a higher 1-year return and slightly higher yield compared to BSV
Both funds stick to short-term bonds but differ in portfolio breadth and minor risk metrics
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The Vanguard Short-Term Bond ETF (NYSEMKT:BSV) charges half the expense ratio of the iShares Core 1-5 Year USD Bond ETF (NASDAQ:ISTB) and has much higher assets under management (AUM), while ISTB beats BSV in terms of dividend yield and one-year performance.
Both BSV and ISTB aim to provide diversified exposure to short-term bonds, appealing to investors seeking stability and modest income. This comparison looks at their costs, returns, risk levels, portfolio makeup, and trading profiles to help clarify which fund may better fit different fixed-income strategies.
Snapshot (cost & size)
| Metric | ISTB | BSV |
|---|---|---|
| Issuer | IShares | Vanguard |
| Expense ratio | 0.06% | 0.03% |
| 1-yr return (as of 2026-04-10) | 5.4% | 4.7% |
| Dividend yield | 4.2% | 3.9% |
| AUM | $4.7 billion | $70.0 billion |
The 1-yr return represents total return over the trailing 12 months.
BSV is more affordable, with an expense ratio of 0.03% versus ISTB’s 0.06%, and ISTB’s yield is modestly higher by 0.3 percentage points, which may appeal to those prioritizing income.
Performance & risk comparison
| Metric | ISTB | BSV |
|---|---|---|
| Max drawdown (5 y) | -9.37% | -8.53% |
| Growth of $1,000 over 5 years | $1,099 | $1,088 |
What's inside
BSV tracks a broad mix of investment-grade short-term bonds, including U.S. government, high-quality corporate, and select international issues, with 30 holdings and a 19-year track record. Its largest positions are United States Treasury Note/Bond 3.50% 02/28/2031 (2.23%), United States Treasury Note/Bond 3.50% 01/31/2028 (1.16%), and United States Treasury Note/Bond 3.75% 01/31/2031 (0.99%).
ISTB, by contrast, casts a much wider net, with over 7,000 holdings. Its top holdings are Treasury Note 10/31/2030 (1.02%), Treasury Note 02/28/2030 (1.00%), and Treasury Note 09/30/2030 (0.98%). Both funds avoid leverage, currency hedging, or other notable quirks.
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What it means for investors
Around 52% of ITIB’s portfolio is invested in U.S. Treasuries. Less than half is supplied by a diverse list of corporate debt issuers. At 0.54% of the portfolio, JPMorgan Chase (NYSE:JPM) is its largest source of corporate bonds.
The BSV ETF also provides steady income with a combination of short-maturity U.S. Treasuries, debt backed by government agencies, and investment-grade corporate debt. The BSV ETF has 11.95% of its portfolio in BBB-rated securities. The rest have a higher rating or are backed by the U.S. Government.
Returns from both funds over the past five years have been disappointing. A $1,000 investment in ISTB five years ago has generated a $99 return. The same investment in the BSV ETF produced a $88 return. Those positive returns are only possible because of accumulated dividend payments. IBIT and BSV investors have seen their principal decline by 5.6% and 4.8%, respectively, over the past five years.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Vanguard Bond Index Funds - Vanguard Short-Term Bond ETF. The Motley Fool has a disclosure policy.
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