VGMS vs. VSDM

Last updated Jun 24, 2026

VGMS (Vanguard Multi-Sector Income Bond ETF) and VSDM (Vanguard Short Duration Tax-Exempt Bond ETF) are both exchange-traded funds - VGMS is a Multisector Bonds fund actively managed by Vanguard, while VSDM is a Municipal Bonds fund actively managed by Vanguard. Both are actively managed. Over the past year, VGMS returned 6.52% vs 4.47% for VSDM. At a 0.47 correlation, their price movements are largely independent. VGMS charges 0.30%/yr vs 0.12%/yr for VSDM.

Performance

VGMS vs. VSDM - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard Multi-Sector Income Bond ETF (VGMS) and Vanguard Short Duration Tax-Exempt Bond ETF (VSDM). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, VGMS achieves a 1.48% return, which is significantly higher than VSDM's 1.37% return.

VGMS

• 1D: 0.17%
• 1M: 0.73%
• YTD: 1.48%
• 6M: 1.55%
• 1Y: 6.52%
• 3Y*: —
• 5Y*: —
• 10Y*: —

VSDM

• 1D: 0.00%
• 1M: 0.75%
• YTD: 1.37%
• 6M: 1.53%
• 1Y: 4.47%
• 3Y*: —
• 5Y*: —
• 10Y*: —

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

VGMS vs. VSDM - Yearly Performance Comparison

	2026 (YTD)	2025
VGMS Vanguard Multi-Sector Income Bond ETF	1.48%	5.51%
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	1.37%	3.49%

Correlation

The correlation between VGMS and VSDM is 0.47, which is low. Their price movements are largely independent, making them effective diversification partners.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.47
Correlation (All Time) Calculated using the full available price history since Jun 11, 2025	0.47

Return for Risk

VGMS vs. VSDM — Risk / Return Rank

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

VGMS

VGMS Risk / Return Rank: 66
VGMS Sharpe Ratio Rank: 65
VGMS Sortino Ratio Rank: 70
VGMS Omega Ratio Rank: 69
VGMS Calmar Ratio Rank: 58
VGMS Martin Ratio Rank: 69

VSDM

VSDM Risk / Return Rank: 82
VSDM Sharpe Ratio Rank: 94
VSDM Sortino Ratio Rank: 95
VSDM Omega Ratio Rank: 96
VSDM Calmar Ratio Rank: 65
VSDM Martin Ratio Rank: 62

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.

VGMS vs. VSDM - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard Multi-Sector Income Bond ETF (VGMS) and Vanguard Short Duration Tax-Exempt Bond ETF (VSDM). 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.

Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.

	VGMS	VSDM	Difference
Sharpe ratio: Return per unit of total volatility	2.01	3.32	-1.31
Sortino ratio: Return per unit of downside risk	2.99	4.80	-1.81
Omega ratio: Gain probability vs. loss probability	1.39	1.82	-0.43
Calmar ratio: Return relative to maximum drawdown	2.66	3.07	-0.41
Martin ratio: Return relative to average drawdown	12.04	10.72	+1.32

VGMS vs. VSDM - Sharpe Ratio Comparison

The current VGMS Sharpe Ratio is 2.01, which is lower than the VSDM Sharpe Ratio of 3.32. The chart below compares the historical Sharpe Ratios of VGMS and VSDM, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Drawdowns

VGMS vs. VSDM - Drawdown Comparison

The maximum VGMS drawdown since its inception was -2.46%, which is greater than VSDM's maximum drawdown of -1.81%. Use the drawdown chart below to compare losses from any high point for VGMS and VSDM.

Drawdown Indicators

	VGMS	VSDM	Difference
Max Drawdown Largest peak-to-trough decline	-2.46%	-1.81%	-0.65%
Max Drawdown (1Y) Largest decline over 1 year	-2.46%	-1.46%	-1.00%
Current Drawdown Current decline from peak	-0.18%	-0.19%	+0.01%
Average Drawdown Average peak-to-trough decline	-0.30%	-0.32%	+0.02%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.54%	0.42%	+0.12%

Volatility

VGMS vs. VSDM - Volatility Comparison

Vanguard Multi-Sector Income Bond ETF (VGMS) has a higher volatility of 1.06% compared to Vanguard Short Duration Tax-Exempt Bond ETF (VSDM) at 0.32%. This indicates that VGMS's price experiences larger fluctuations and is considered to be riskier than VSDM based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	VGMS	VSDM	Difference
Volatility (1M) Calculated over the trailing 1-month period	1.06%	0.32%	+0.74%
Volatility (6M) Calculated over the trailing 6-month period	2.64%	1.07%	+1.57%
Volatility (1Y) Calculated over the trailing 1-year period	3.27%	1.36%	+1.91%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	3.24%	1.92%	+1.32%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	3.24%	1.92%	+1.32%

VGMS vs. VSDM - Expense Ratio Comparison

VGMS has a 0.30% expense ratio, which is higher than VSDM's 0.12% expense ratio.

Dividends

VGMS vs. VSDM - Dividend Comparison

VGMS's dividend yield for the trailing twelve months is around 5.14%, more than VSDM's 3.10% yield.

Position	TTM	2025	2024
VGMS Vanguard Multi-Sector Income Bond ETF	5.14%	2.94%	0.00%
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	3.10%	3.06%	0.35%

Frequently Asked Questions

Can I hold both VGMS and VSDM in my portfolio?

VGMS and VSDM have a correlation of 0.47, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VGMS or VSDM?

VGMS has higher volatility (1.06%) compared to VSDM (0.32%). In terms of maximum drawdown, VGMS dropped -2.46% vs VSDM's -1.81%.

Which ETF is better, VGMS or VSDM?

On 1-year performance, VGMS leads with 6.52% vs 4.47% for VSDM. On fees, VSDM is cheaper at 0.12% per year. On volatility, VSDM has been the lower-risk option at 0.32%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, VGMS or VSDM?

Over the 1-year period, VGMS has performed better with a 6.52% return vs 4.47%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VGMS or VSDM?

VSDM is cheaper with a 0.12% expense ratio, compared with 0.30% for VGMS.

Which ETF pays a higher dividend yield, VGMS or VSDM?

VGMS has the higher dividend yield at 5.14%, compared with 3.10% for VSDM.

What is the main difference between VGMS and VSDM?

VGMS is categorized as Multisector Bonds, while VSDM is Municipal Bonds. Their fees differ too: 0.30% for VGMS and 0.12% for VSDM.

Which has better risk-adjusted returns?

VSDM currently has the higher Sharpe Ratio (3.32 vs 2.01), 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.