Same Fee, Different Risk: How VCSH and BSV Approach Short-Term Bonds
Key Points
Both ETFs charge the same low expense ratio, but VCSH offers a higher yield than BSV.
VCSH has delivered stronger one-year and five-year total returns, though BSV has seen a slightly smaller maximum drawdown.
BSV holds a broader mix of short-term bonds, while VCSH focuses primarily on corporates.
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The Vanguard Short-Term Corporate Bond ETF (NASDAQ:VCSH) and Vanguard Short-Term Bond ETF (NYSEMKT:BSV) both offer low-cost access to short-maturity bonds, but VCSH pays a higher yield and has outperformed BSV in recent years, while BSV holds a wider array of bond types and has weathered downturns with slightly less volatility.
Both VCSH and BSV are designed for investors seeking modest risk and stable income from bonds with maturities of one to five years, but their approaches differ: VCSH leans into investment-grade corporate bonds, while BSV casts a wider net by including U.S. Treasuries, corporates, and select international bonds. This comparison highlights the differences in income, risk, and composition for those considering a short-term bond ETF.
Snapshot (cost & size)
| Metric | VCSH | BSV |
|---|---|---|
| Issuer | Vanguard | Vanguard |
| Expense ratio | 0.03% | 0.03% |
| 1-yr return (as of 2026-04-15) | 5.9% | 4.4% |
| Dividend yield | 4.4% | 3.9% |
| Beta | 0.14 | 0.09 |
| AUM | $48.6 billion | $69.8 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
Both funds charge the same low expense ratio of 0.03%, but VCSH stands out for its higher yield, offering a 4.4% payout compared to BSV’s 3.9%—a difference that may appeal to those prioritizing income.
Performance & risk comparison
| Metric | VCSH | BSV |
|---|---|---|
| Max drawdown (5 y) | -9.48% | -8.53% |
| Growth of $1,000 over 5 years | $1,128 | $1,089 |
What's inside
BSV tracks a market-weighted index of U.S.-government bonds, investment-grade corporate and investment-grade international dollar-denominated bonds with maturities of 1-5 years. The fund has a long track record, having launched 19 years ago. VCSH, by contrast, is based on the Bloomberg US Corporate (1-5 Y) index. The fund tracks a market value-weighted index of U.S. investment grade, fixed-rate corporate bonds with maturities between 1 and 5 years, and was launched in 2009.
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What this means for investors
Short-term bond funds like these occupy a specific role in a portfolio. They are not trying to generate big returns, but to preserve capital, dampen volatility, and produce modest income while interest rate risk stays low. VCSH and BSV both do this at identical, negligible cost, but they take different approaches to credit risk.
VCSH holds exclusively investment-grade corporate bonds maturing in one to five years. Corporations pay more than the government to borrow money, which is why VCSH yields more than BSV. That premium comes with a catch, though. Corporate bonds carry credit risk that government bonds don't, and in periods of economic stress, spreads can widen and prices can fall even when interest rates hold steady.
BSV blends roughly 70% government bonds with about 25% investment-grade corporates and some international dollar-denominated debt. That government-heavy mix makes it the more defensive of the two, with a lower yield but a steadier ride when markets get nervous.
For investors comfortable with modest corporate credit exposure, VCSH is the stronger income choice. BSV suits those who prioritize stability above all else.
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