These Short-Term Bond ETFs Offer a Broad Exposure to Fixed-Income

Core Insights - The Vanguard Short-Term Bond ETF (BSV) and iShares Core 1-5 Year USD Bond ETF (ISTB) focus on the short end of the U.S. bond market, targeting investment-grade securities with maturities between one and five years, highlighting differences in cost, portfolio composition, and risk for investors [1] Cost & Size Comparison - ISTB has an expense ratio of 0.06%, while BSV has a lower expense ratio of 0.03% [2] - As of February 7, 2026, ISTB's one-year return is 1.73%, compared to BSV's 1.68% [2] - ISTB offers a higher dividend yield of 4.14% compared to BSV's 3.86% [2] - ISTB has a beta of 0.11, while BSV has a beta of 0.09, indicating slightly higher volatility for ISTB [2] - ISTB's assets under management (AUM) stand at $4.79 billion, whereas BSV has a significantly larger AUM of $43.41 billion [2] Performance & Risk Comparison - Over the past five years, ISTB experienced a maximum drawdown of 9.34%, while BSV had a drawdown of 8.55% [4] - An investment of $1,000 in ISTB would have grown to $943, while the same investment in BSV would have grown to $951 over five years [4] Portfolio Composition - BSV holds a mix of U.S. Treasuries and corporate and investment-grade international bonds, with 3,117 holdings, 73% of which are AAA-rated bonds [5] - ISTB has over 7,000 holdings, with 61% being AA-rated bonds, and includes bonds rated lower than B, indicating a broader risk profile [6] Implications for Investors - BSV's bond holdings are primarily in AA, A, and BBB categories, which are riskier than AAA-rated bonds, while ISTB includes lower-rated bonds, increasing its volatility [7][8] - Both ETFs provide stable and consistent dividend payouts, but investors should be aware that bond markets typically grow more slowly than stock markets [9]