VMBS vs. VGSH
VMBS (Vanguard Mortgage-Backed Securities ETF) and VGSH (Vanguard Short-Term Treasury ETF) are both exchange-traded funds - VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS 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 10 years, VMBS returned 1.36%/yr vs 1.73%/yr for VGSH. A 0.62 correlation means they provide meaningful diversification when combined. VMBS charges 0.04%/yr vs 0.03%/yr for VGSH.
Performance
VMBS vs. VGSH - Performance Comparison
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Returns By Period
In the year-to-date period, VMBS achieves a 0.87% return, which is significantly higher than VGSH's 0.57% return. Over the past 10 years, VMBS has underperformed VGSH with an annualized return of 1.36%, while VGSH has yielded a comparatively higher 1.73% annualized return.
VMBS
- 1D
- -0.19%
- 1M
- 1.09%
- YTD
- 0.87%
- 6M
- 1.43%
- 1Y
- 6.51%
- 3Y*
- 4.69%
- 5Y*
- 0.53%
- 10Y*
- 1.36%
VGSH
- 1D
- -0.03%
- 1M
- 0.28%
- YTD
- 0.57%
- 6M
- 0.83%
- 1Y
- 3.36%
- 3Y*
- 4.25%
- 5Y*
- 1.83%
- 10Y*
- 1.73%
VMBS vs. VGSH - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 0.87% | 8.36% | 1.70% | 5.34% | -11.90% | -1.28% | 3.76% | 6.19% | 0.91% | 2.47% |
VGSH Vanguard Short-Term Treasury ETF | 0.57% | 5.07% | 4.00% | 4.31% | -3.86% | -0.60% | 3.04% | 3.52% | 1.55% | 0.04% |
Correlation
The correlation between VMBS and VGSH is 0.81, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.81 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.80 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.80 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.72 |
Correlation (All Time) Calculated using the full available price history since Nov 23, 2009 | 0.62 |
The correlation between VMBS and VGSH shifts across timeframes, from 0.62 (all time) to 0.81 (1 year), reflecting how their relationship changes across market environments.
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Return for Risk
VMBS vs. VGSH — Risk / Return Rank
VMBS
VGSH
VMBS vs. VGSH - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Mortgage-Backed Securities ETF (VMBS) 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.
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.
| VMBS | VGSH | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -1.18 | ||
| Sortino ratioReturn per unit of downside risk | -2.18 | ||
| Omega ratioGain probability vs. loss probability | 1.26 | 1.55 | -0.29 |
| Calmar ratioReturn relative to maximum drawdown | 2.28 | 3.76 | -1.48 |
| Martin ratioReturn relative to average drawdown | 7.36 | 14.67 | -7.31 |
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Drawdowns
VMBS vs. VGSH - Drawdown Comparison
The maximum VMBS drawdown since its inception was -17.47%, which is greater than VGSH's maximum drawdown of -5.70%. Use the drawdown chart below to compare losses from any high point for VMBS and VGSH.
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Drawdown Indicators
| VMBS | VGSH | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.47% | -5.70% | -11.77% |
Max Drawdown (1Y)Largest decline over 1 year | -2.68% | -0.88% | -1.80% |
Max Drawdown (3Y)Largest decline over 3 years | -7.65% | -0.97% | -6.68% |
Max Drawdown (5Y)Largest decline over 5 years | -17.12% | -5.66% | -11.46% |
Max Drawdown (10Y)Largest decline over 10 years | -17.47% | -5.70% | -11.77% |
Current DrawdownCurrent decline from peak | -1.12% | -0.21% | -0.91% |
Average DrawdownAverage peak-to-trough decline | -2.49% | -0.60% | -1.89% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.83% | 0.23% | +0.60% |
Volatility
VMBS vs. VGSH - Volatility Comparison
Vanguard Mortgage-Backed Securities ETF (VMBS) has a higher volatility of 1.57% compared to Vanguard Short-Term Treasury ETF (VGSH) at 0.37%. This indicates that VMBS'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.
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Volatility by Period
| VMBS | VGSH | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.57% | 0.37% | +1.20% |
Volatility (6M)Calculated over the trailing 6-month period | 3.23% | 0.90% | +2.33% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.29% | 1.28% | +3.01% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.77% | 1.97% | +4.80% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.40% | 1.58% | +3.82% |
VMBS vs. VGSH - Expense Ratio Comparison
VMBS has a 0.04% expense ratio, which is higher than VGSH's 0.03% expense ratio. However, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.
Dividends
VMBS vs. VGSH - Dividend Comparison
VMBS's dividend yield for the trailing twelve months is around 4.18%, more than VGSH's 3.87% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
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% |
VMBS Vanguard Mortgage-Backed Securities ETF | 4.18% | 4.20% | 3.94% | 3.31% | 2.35% | 1.02% | 2.01% | 2.77% | 2.72% | 2.16% | 2.10% | 2.12% |
Frequently Asked Questions
VMBS and VGSH have a correlation of 0.81, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.
VMBS has higher volatility (1.57%) compared to VGSH (0.37%). In terms of maximum drawdown, VMBS dropped -17.47% vs VGSH's -5.70%.
On 10-year performance, VGSH leads with 1.73% vs 1.36% for VMBS. On fees, VGSH is cheaper at 0.03% per year. On volatility, VGSH has been the lower-risk option at 0.37%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, VGSH has performed better with a 1.73% return vs 1.36%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
VGSH is cheaper with a 0.03% expense ratio, compared with 0.04% for VMBS.
VMBS has the higher dividend yield at 4.18%, compared with 3.87% for VGSH.
VMBS is categorized as Mortgage Backed Securities, while VGSH is Government Bonds. VMBS tracks Barclays Capital U.S. MBS Index, while VGSH tracks Bloomberg U.S. Treasury 1-3 Year Index. Their fees differ too: 0.04% for VMBS and 0.03% for VGSH.
VGSH currently has the higher Sharpe Ratio (2.61 vs 1.43), 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.
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