Vanguard VCSH vs. iShares IGSB: How Two Short-Term Bond ETFs Deliver Stability in Different Ways

Core Insights - The Vanguard Short-Term Corporate Bond ETF (VCSH) and iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) may appear similar but differ significantly in portfolio construction, impacting stability and income for bond investors [1][3][11] Cost and Size Comparison - VCSH has an expense ratio of 0.03% while IGSB has 0.04%, making VCSH slightly cheaper [4] - Both ETFs reported a 1-year return of 1.8% as of November 28, 2025, with IGSB offering a marginally higher dividend yield of 4.4% compared to VCSH's 4.3% [4][5] - VCSH has assets under management (AUM) of $46.8 billion, significantly larger than IGSB's $21.8 billion [4] Performance and Risk Analysis - Over the past five years, both ETFs experienced nearly identical maximum drawdowns, with VCSH at (9.47%) and IGSB at (9.46%) [6] - A $1,000 investment in either fund would have resulted in a similar outcome, with both funds growing to $963 [6][8] Portfolio Composition - IGSB focuses on U.S. dollar-denominated, investment-grade corporate bonds with maturities of one to five years, holding over 4,000 bonds for broad diversification [9][11] - VCSH employs a sampling approach, resulting in fewer line items but still capturing the broader short-term corporate bond market, leading to a cleaner maturity profile [10][12] Investment Strategy Alignment - IGSB is suited for investors prioritizing broad diversification and income, while VCSH appeals to those focused on cost efficiency and predictable rate sensitivity [13]