SMBS vs. VGSH

Last updated Jun 4, 2026

SMBS (Schwab Mortgage-Backed Securities ETF) and VGSH (Vanguard Short-Term Treasury ETF) are both exchange-traded funds - SMBS is a Mortgage Backed Securities fund tracking the Bloomberg US MBS Float Adjusted Total Return Index, while VGSH is a Government Bonds fund tracking the Bloomberg U.S. Treasury 1-3 Year Index. Both are passively managed. Over the past year, SMBS returned 6.78% vs 3.43% for VGSH. A 0.76 correlation means they provide meaningful diversification when combined. Both charge a 0.03% expense ratio.

Performance

SMBS vs. VGSH - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Schwab Mortgage-Backed Securities ETF (SMBS) and Vanguard Short-Term Treasury ETF (VGSH). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, SMBS achieves a 0.70% return, which is significantly higher than VGSH's 0.48% return.

SMBS

• 1D: -0.24%
• 1M: 0.33%
• YTD: 0.70%
• 6M: 0.82%
• 1Y: 6.78%
• 3Y*: —
• 5Y*: —
• 10Y*: —

VGSH

• 1D: -0.03%
• 1M: 0.08%
• YTD: 0.48%
• 6M: 0.74%
• 1Y: 3.43%
• 3Y*: 4.15%
• 5Y*: 1.81%
• 10Y*: 1.74%

*Multi-year figures are annualized to reflect compound growth (CAGR)

SMBS vs. VGSH - Yearly Performance Comparison

	2026 (YTD)	2025	2024
SMBS Schwab Mortgage-Backed Securities ETF	0.70%	8.15%	-0.07%
VGSH Vanguard Short-Term Treasury ETF	0.48%	5.07%	0.55%

Correlation

The correlation between SMBS and VGSH is 0.80, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.80
Correlation (All Time) Calculated using the full available price history since Nov 20, 2024	0.76

The correlation between SMBS and VGSH has been stable across timeframes, ranging from 0.76 to 0.80 - a consistent structural relationship.

Return for Risk

SMBS vs. VGSH — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

SMBS

SMBS Risk / Return Rank: 48
SMBS Sharpe Ratio Rank: 47
SMBS Sortino Ratio Rank: 49
SMBS Omega Ratio Rank: 47
SMBS Calmar Ratio Rank: 49
SMBS Martin Ratio Rank: 49

VGSH

VGSH Risk / Return Rank: 83
VGSH Sharpe Ratio Rank: 81
VGSH Sortino Ratio Rank: 91
VGSH Omega Ratio Rank: 88
VGSH Calmar Ratio Rank: 76
VGSH Martin Ratio Rank: 78

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

SMBS vs. VGSH - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Schwab Mortgage-Backed Securities ETF (SMBS) and Vanguard Short-Term Treasury ETF (VGSH). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

	SMBS	VGSH	Difference
Sharpe ratio Return per unit of total volatility	1.64	2.68	-1.03
Sortino ratio Return per unit of downside risk	2.42	4.43	-2.01
Omega ratio Gain probability vs. loss probability	1.30	1.57	-0.27
Calmar ratio Return relative to maximum drawdown	2.41	3.90	-1.49
Martin ratio Return relative to average drawdown	8.21	15.52	-7.30
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

SMBS vs. VGSH - Sharpe Ratio Comparison

The current SMBS Sharpe Ratio is 1.64, which is lower than the VGSH Sharpe Ratio of 2.68. The chart below compares the historical Sharpe Ratios of SMBS and VGSH, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	SMBS	VGSH	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	1.64	2.68	-1.03
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	—	0.93	—
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	—	1.11	—
Sharpe Ratio (All Time) Calculated using the full available price history	1.18	1.01	+0.17

Drawdowns

SMBS vs. VGSH - Drawdown Comparison

The maximum SMBS drawdown since its inception was -3.20%, smaller than the maximum VGSH drawdown of -5.70%. Use the drawdown chart below to compare losses from any high point for SMBS and VGSH.

Drawdown Indicators

	SMBS	VGSH	Difference
Max Drawdown Largest peak-to-trough decline	-3.20%	-5.70%	+2.50%
Max Drawdown (1Y) Largest decline over 1 year	-2.83%	-0.88%	-1.95%
Max Drawdown (3Y) Largest decline over 3 years	—	-0.97%	—
Max Drawdown (5Y) Largest decline over 5 years	—	-5.66%	—
Max Drawdown (10Y) Largest decline over 10 years	—	-5.70%	—
Current Drawdown Current decline from peak	-1.33%	-0.29%	-1.04%
Average Drawdown Average peak-to-trough decline	-0.84%	-0.60%	-0.24%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.83%	0.22%	+0.61%

Volatility

SMBS vs. VGSH - Volatility Comparison

Schwab Mortgage-Backed Securities ETF (SMBS) has a higher volatility of 1.55% compared to Vanguard Short-Term Treasury ETF (VGSH) at 0.35%. This indicates that SMBS's price experiences larger fluctuations and is considered to be riskier than VGSH based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	SMBS	VGSH	Difference
Volatility (1M) Calculated over the trailing 1-month period	1.55%	0.35%	+1.20%
Volatility (6M) Calculated over the trailing 6-month period	3.03%	0.88%	+2.15%
Volatility (1Y) Calculated over the trailing 1-year period	4.15%	1.29%	+2.86%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	4.86%	1.97%	+2.89%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	4.86%	1.57%	+3.29%

SMBS vs. VGSH - Expense Ratio Comparison

Both SMBS and VGSH have an expense ratio of 0.03%, making them cost-effective options compared to the broader market, where average expense ratios typically range from 0.3% to 0.9%.

Dividends

SMBS vs. VGSH - Dividend Comparison

SMBS's dividend yield for the trailing twelve months is around 5.17%, more than VGSH's 3.87% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
SMBS Schwab Mortgage-Backed Securities ETF	5.17%	4.83%	0.50%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
VGSH Vanguard Short-Term Treasury ETF	3.87%	4.00%	4.18%	3.31%	1.15%	0.66%	1.74%	2.28%	1.79%	1.10%	0.84%	0.69%

Frequently Asked Questions

Can I hold both SMBS and VGSH in my portfolio?

SMBS and VGSH have a correlation of 0.80, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, SMBS or VGSH?

SMBS has higher volatility (1.55%) compared to VGSH (0.35%). In terms of maximum drawdown, SMBS dropped -3.20% vs VGSH's -5.70%.

Which ETF is better, SMBS or VGSH?

On 1-year performance, SMBS leads with 6.78% vs 3.43% for VGSH. Both ETFs have the same 0.03% expense ratio. On volatility, VGSH has been the lower-risk option at 0.35%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, SMBS or VGSH?

Over the 1-year period, SMBS has performed better with a 6.78% return vs 3.43%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, SMBS or VGSH?

SMBS and VGSH have the same expense ratio: 0.03% per year.

Which ETF pays a higher dividend yield, SMBS or VGSH?

SMBS has the higher dividend yield at 5.17%, compared with 3.87% for VGSH.

What is the main difference between SMBS and VGSH?

SMBS is categorized as Mortgage Backed Securities, while VGSH is Government Bonds. SMBS tracks Bloomberg US MBS Float Adjusted Total Return Index, while VGSH tracks Bloomberg U.S. Treasury 1-3 Year Index. They also come from different issuers: Charles Schwab and Vanguard.

Which has better risk-adjusted returns?

VGSH currently has the higher Sharpe Ratio (2.68 vs 1.64), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.