BSV delivered 9% gains over five years while BND lost 1%, matching yields but avoiding long-duration volatility.
Vanguard’s Short-Term Bond ETF (BSV) and Total Bond Market ETF (BND) charge identical 0.04% fees and offer similar yields, yet BSV’s shorter maturities led to a 9% gain over five years compared to BND’s 1% loss. Both funds distribute near-identical income—$3.19 annualized for BSV at $78 versus $2.92 for BND at $72—but BSV’s sub-five-year holdings reduce interest rate sensitivity.
BND, the default bond allocation in most target-date funds and 401(k) plans, behaves like an active bet on falling rates due to its longer duration. With the 10-year Treasury yield near its 93rd-percentile 52-week high, BND’s price swings more sharply with Fed policy shifts, while BSV remains stable. The disparity highlights an unintended risk exposure for investors who never opted into long-duration bonds.