VSDB vs. VSDM

Last updated Jun 24, 2026

VSDB (Vanguard Short Duration Bond ETF Shares) and VSDM (Vanguard Short Duration Tax-Exempt Bond ETF) are both exchange-traded funds - VSDB is a Short-Term Bond fund actively managed by Vanguard, while VSDM is a Municipal Bonds fund actively managed by Vanguard. Both are actively managed. Over the past year, VSDB returned 4.63% vs 4.47% for VSDM. A 0.51 correlation means they provide meaningful diversification when combined. VSDB charges 0.15%/yr vs 0.12%/yr for VSDM.

Performance

VSDB vs. VSDM - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard Short Duration Bond ETF Shares (VSDB) 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, VSDB achieves a 0.98% return, which is significantly lower than VSDM's 1.37% return.

VSDB

• 1D: 0.03%
• 1M: 0.33%
• YTD: 0.98%
• 6M: 1.21%
• 1Y: 4.63%
• 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)

VSDB vs. VSDM - Yearly Performance Comparison

	2026 (YTD)	2025
VSDB Vanguard Short Duration Bond ETF Shares	0.98%	4.88%
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	1.37%	3.94%

Correlation

The correlation between VSDB and VSDM is 0.51, 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	0.51
Correlation (All Time) Calculated using the full available price history since Apr 3, 2025	0.51

The correlation between VSDB and VSDM has been stable across timeframes, ranging from 0.51 to 0.51 - a consistent structural relationship.

Return for Risk

VSDB vs. VSDM — Risk / Return Rank

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

VSDB

VSDB Risk / Return Rank: 83
VSDB Sharpe Ratio Rank: 87
VSDB Sortino Ratio Rank: 92
VSDB Omega Ratio Rank: 90
VSDB Calmar Ratio Rank: 69
VSDB Martin Ratio Rank: 78

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.

VSDB vs. VSDM - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard Short Duration Bond ETF Shares (VSDB) 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.

	VSDB	VSDM	Difference
Sharpe ratio: Return per unit of total volatility	2.67	3.32	-0.64
Sortino ratio: Return per unit of downside risk	4.15	4.80	-0.66
Omega ratio: Gain probability vs. loss probability	1.55	1.82	-0.27
Calmar ratio: Return relative to maximum drawdown	3.26	3.07	+0.19
Martin ratio: Return relative to average drawdown	14.27	10.72	+3.55

VSDB vs. VSDM - Sharpe Ratio Comparison

The current VSDB Sharpe Ratio is 2.67, which is comparable to the VSDM Sharpe Ratio of 3.32. The chart below compares the historical Sharpe Ratios of VSDB 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

VSDB vs. VSDM - Drawdown Comparison

The maximum VSDB drawdown since its inception was -1.42%, smaller than the maximum VSDM drawdown of -1.81%. Use the drawdown chart below to compare losses from any high point for VSDB and VSDM.

Drawdown Indicators

	VSDB	VSDM	Difference
Max Drawdown Largest peak-to-trough decline	-1.42%	-1.81%	+0.39%
Max Drawdown (1Y) Largest decline over 1 year	-1.42%	-1.46%	+0.04%
Current Drawdown Current decline from peak	-0.24%	-0.19%	-0.05%
Average Drawdown Average peak-to-trough decline	-0.19%	-0.32%	+0.13%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.32%	0.42%	-0.10%

Volatility

VSDB vs. VSDM - Volatility Comparison

Vanguard Short Duration Bond ETF Shares (VSDB) has a higher volatility of 0.52% compared to Vanguard Short Duration Tax-Exempt Bond ETF (VSDM) at 0.32%. This indicates that VSDB'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

	VSDB	VSDM	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.52%	0.32%	+0.20%
Volatility (6M) Calculated over the trailing 6-month period	1.39%	1.07%	+0.32%
Volatility (1Y) Calculated over the trailing 1-year period	1.74%	1.36%	+0.38%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	1.90%	1.92%	-0.02%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	1.90%	1.92%	-0.02%

VSDB vs. VSDM - Expense Ratio Comparison

VSDB has a 0.15% expense ratio, which is higher than VSDM's 0.12% 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

VSDB vs. VSDM - Dividend Comparison

VSDB's dividend yield for the trailing twelve months is around 4.16%, more than VSDM's 3.10% yield.

Position	TTM	2025	2024
VSDB Vanguard Short Duration Bond ETF Shares	4.16%	3.30%	0.00%
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	3.10%	3.06%	0.35%

Frequently Asked Questions

Can I hold both VSDB and VSDM in my portfolio?

VSDB and VSDM have a correlation of 0.51, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VSDB or VSDM?

VSDB has higher volatility (0.52%) compared to VSDM (0.32%). In terms of maximum drawdown, VSDB dropped -1.42% vs VSDM's -1.81%.

Which ETF is better, VSDB or VSDM?

On 1-year performance, VSDB leads with 4.63% 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, VSDB or VSDM?

Over the 1-year period, VSDB has performed better with a 4.63% return vs 4.47%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VSDB or VSDM?

VSDM is cheaper with a 0.12% expense ratio, compared with 0.15% for VSDB.

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

VSDB has the higher dividend yield at 4.16%, compared with 3.10% for VSDM.

What is the main difference between VSDB and VSDM?

VSDB is categorized as Short-Term Bond, while VSDM is Municipal Bonds. Their fees differ too: 0.15% for VSDB and 0.12% for VSDM.

Which has better risk-adjusted returns?

VSDM currently has the higher Sharpe Ratio (3.32 vs 2.67), 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.