VMLTX vs. VWSTX

Last updated Jun 24, 2026

VMLTX (Vanguard Limited-Term Tax-Exempt Fund Investor Shares) and VWSTX (Vanguard Short-Term Tax-Exempt Fund Investor Shares) are both Municipal Bonds funds from Vanguard. Over the past 10 years, VMLTX returned 2.08%/yr vs 1.93%/yr for VWSTX. A 0.64 correlation means they provide meaningful diversification when combined. Both charge a 0.17% expense ratio.

Performance

VMLTX vs. VWSTX - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard Limited-Term Tax-Exempt Fund Investor Shares (VMLTX) and Vanguard Short-Term Tax-Exempt Fund Investor Shares (VWSTX). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, VMLTX achieves a 1.01% return, which is significantly lower than VWSTX's 1.10% return. Over the past 10 years, VMLTX has outperformed VWSTX with an annualized return of 2.08%, while VWSTX has yielded a comparatively lower 1.93% annualized return.

VMLTX

• 1D: 0.00%
• 1M: 0.72%
• YTD: 1.01%
• 6M: 1.37%
• 1Y: 3.98%
• 3Y*: 4.14%
• 5Y*: 2.13%
• 10Y*: 2.08%

VWSTX

• 1D: -0.06%
• 1M: 0.44%
• YTD: 1.10%
• 6M: 1.43%
• 1Y: 3.48%
• 3Y*: 4.09%
• 5Y*: 2.50%
• 10Y*: 1.93%

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

VMLTX vs. VWSTX - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
VMLTX Vanguard Limited-Term Tax-Exempt Fund Investor Shares	1.01%	5.39%	3.14%	4.19%	-2.98%	0.83%	3.30%	4.11%	1.56%	2.02%
VWSTX Vanguard Short-Term Tax-Exempt Fund Investor Shares	1.10%	4.79%	3.68%	3.87%	-0.81%	0.17%	1.82%	2.50%	1.59%	1.00%

Correlation

The correlation between VMLTX and VWSTX is 0.66, 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	0.66
Correlation (3Y) Calculated over the trailing 3-year period	0.74
Correlation (5Y) Calculated over the trailing 5-year period	0.76
Correlation (10Y) Calculated over the trailing 10-year period	0.70
Correlation (All Time) Calculated using the full available price history since Aug 31, 1987	0.64

The correlation between VMLTX and VWSTX shifts across timeframes, from 0.64 (all time) to 0.76 (5 years), reflecting how their relationship changes across market environments.

Return for Risk

VMLTX vs. VWSTX — Risk / Return Rank

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

VMLTX

VMLTX Risk / Return Rank: 75
VMLTX Sharpe Ratio Rank: 88
VMLTX Sortino Ratio Rank: 96
VMLTX Omega Ratio Rank: 97
VMLTX Calmar Ratio Rank: 51
VMLTX Martin Ratio Rank: 42

VWSTX

VWSTX Risk / Return Rank: 97
VWSTX Sharpe Ratio Rank: 96
VWSTX Sortino Ratio Rank: 99
VWSTX Omega Ratio Rank: 98
VWSTX Calmar Ratio Rank: 94
VWSTX Martin Ratio Rank: 96

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.

VMLTX vs. VWSTX - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard Limited-Term Tax-Exempt Fund Investor Shares (VMLTX) and Vanguard Short-Term Tax-Exempt Fund Investor Shares (VWSTX). 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.

	VMLTX	VWSTX	Difference
Sharpe ratio: Return per unit of total volatility	2.68	3.18	-0.50
Sortino ratio: Return per unit of downside risk	4.88	7.72	-2.83
Omega ratio: Gain probability vs. loss probability	1.86	2.43	-0.57
Calmar ratio: Return relative to maximum drawdown	2.61	5.07	-2.46
Martin ratio: Return relative to average drawdown	8.49	22.31	-13.82

VMLTX vs. VWSTX - Sharpe Ratio Comparison

The current VMLTX Sharpe Ratio is 2.68, which is comparable to the VWSTX Sharpe Ratio of 3.18. The chart below compares the historical Sharpe Ratios of VMLTX and VWSTX, 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

VMLTX vs. VWSTX - Drawdown Comparison

The maximum VMLTX drawdown since its inception was -6.41%, which is greater than VWSTX's maximum drawdown of -3.09%. Use the drawdown chart below to compare losses from any high point for VMLTX and VWSTX.

Drawdown Indicators

	VMLTX	VWSTX	Difference
Max Drawdown Largest peak-to-trough decline	-6.41%	-3.09%	-3.32%
Max Drawdown (1Y) Largest decline over 1 year	-1.53%	-0.69%	-0.84%
Max Drawdown (3Y) Largest decline over 3 years	-2.02%	-1.01%	-1.01%
Max Drawdown (5Y) Largest decline over 5 years	-5.69%	-2.32%	-3.37%
Max Drawdown (10Y) Largest decline over 10 years	-6.41%	-3.08%	-3.33%
Current Drawdown Current decline from peak	-0.40%	-0.06%	-0.34%
Average Drawdown Average peak-to-trough decline	-0.48%	-0.32%	-0.16%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.47%	0.16%	+0.31%

Volatility

VMLTX vs. VWSTX - Volatility Comparison

Vanguard Limited-Term Tax-Exempt Fund Investor Shares (VMLTX) has a higher volatility of 0.37% compared to Vanguard Short-Term Tax-Exempt Fund Investor Shares (VWSTX) at 0.35%. This indicates that VMLTX's price experiences larger fluctuations and is considered to be riskier than VWSTX based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	VMLTX	VWSTX	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.37%	0.35%	+0.02%
Volatility (6M) Calculated over the trailing 6-month period	1.13%	0.82%	+0.31%
Volatility (1Y) Calculated over the trailing 1-year period	1.49%	1.10%	+0.39%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	1.86%	1.21%	+0.65%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	1.93%	1.11%	+0.82%

VMLTX vs. VWSTX - Expense Ratio Comparison

Both VMLTX and VWSTX have an expense ratio of 0.17%, making them cost-effective options compared to the broader market, where average expense ratios typically range from 0.3% to 0.9%.

Dividends

VMLTX vs. VWSTX - Dividend Comparison

VMLTX's dividend yield for the trailing twelve months is around 3.07%, which matches VWSTX's 3.04% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
VMLTX Vanguard Limited-Term Tax-Exempt Fund Investor Shares	3.07%	3.75%	3.27%	2.30%	1.56%	1.64%	1.62%	2.01%	1.81%	1.55%	1.52%	1.50%
VWSTX Vanguard Short-Term Tax-Exempt Fund Investor Shares	3.04%	3.90%	3.73%	2.42%	1.16%	0.61%	1.17%	1.71%	1.45%	1.06%	0.87%	0.70%

Frequently Asked Questions

Can I hold both VMLTX and VWSTX in my portfolio?

VMLTX and VWSTX have a correlation of 0.66, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VMLTX or VWSTX?

VMLTX has higher volatility (0.37%) compared to VWSTX (0.35%). In terms of maximum drawdown, VMLTX dropped -6.41% vs VWSTX's -3.09%.

Which has better risk-adjusted returns?

VWSTX currently has the higher Sharpe Ratio (3.18 vs 2.68), 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.