VTEL vs. VSDM

Last updated Jun 3, 2026

VTEL (Vanguard Long-Term Tax-Exempt Bond ETF) and VSDM (Vanguard Short Duration Tax-Exempt Bond ETF) are both Municipal Bonds funds from Vanguard. VTEL is passively managed, while VSDM is actively managed. Over the past year, VTEL returned 8.64% vs 4.93% for VSDM. A 0.66 correlation means they provide meaningful diversification when combined. VTEL charges 0.09%/yr vs 0.12%/yr for VSDM.

Performance

VTEL vs. VSDM - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard Long-Term Tax-Exempt Bond ETF (VTEL) 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, VTEL achieves a 1.88% return, which is significantly higher than VSDM's 1.22% return.

VTEL

• 1D: 0.21%
• 1M: 0.68%
• YTD: 1.88%
• 6M: 2.25%
• 1Y: 8.64%
• 3Y*: —
• 5Y*: —
• 10Y*: —

VSDM

• 1D: 0.10%
• 1M: 0.41%
• YTD: 1.22%
• 6M: 1.62%
• 1Y: 4.93%
• 3Y*: —
• 5Y*: —
• 10Y*: —

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

VTEL vs. VSDM - Yearly Performance Comparison

	2026 (YTD)	2025
VTEL Vanguard Long-Term Tax-Exempt Bond ETF	1.88%	6.66%
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	1.22%	4.30%

Correlation

The correlation between VTEL and VSDM 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 (All Time) Calculated using the full available price history since May 23, 2025	0.66

The correlation between VTEL and VSDM has been stable across timeframes, ranging from 0.66 to 0.66 - a consistent structural relationship.

Return for Risk

VTEL vs. VSDM — Risk / Return Rank

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

VTEL

VTEL Risk / Return Rank: 66
VTEL Sharpe Ratio Rank: 69
VTEL Sortino Ratio Rank: 76
VTEL Omega Ratio Rank: 79
VTEL Calmar Ratio Rank: 51
VTEL Martin Ratio Rank: 53

VSDM

VSDM Risk / Return Rank: 84
VSDM Sharpe Ratio Rank: 94
VSDM Sortino Ratio Rank: 95
VSDM Omega Ratio Rank: 97
VSDM Calmar Ratio Rank: 67
VSDM Martin Ratio Rank: 65

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.

VTEL vs. VSDM - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard Long-Term Tax-Exempt Bond ETF (VTEL) 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.

	VTEL	VSDM	Difference
Sharpe ratio Return per unit of total volatility	2.32	3.62	-1.30
Sortino ratio Return per unit of downside risk	3.49	5.28	-1.79
Omega ratio Gain probability vs. loss probability	1.48	1.90	-0.41
Calmar ratio Return relative to maximum drawdown	2.58	3.40	-0.82
Martin ratio Return relative to average drawdown	9.23	12.04	-2.82
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

VTEL vs. VSDM - Sharpe Ratio Comparison

The current VTEL Sharpe Ratio is 2.32, which is lower than the VSDM Sharpe Ratio of 3.62. The chart below compares the historical Sharpe Ratios of VTEL 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.

Sharpe Ratios by Period

	VTEL	VSDM	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	2.32	3.62	-1.30
Sharpe Ratio (All Time) Calculated using the full available price history	2.26	2.19	+0.07

Drawdowns

VTEL vs. VSDM - Drawdown Comparison

The maximum VTEL drawdown since its inception was -3.22%, which is greater than VSDM's maximum drawdown of -1.81%. Use the drawdown chart below to compare losses from any high point for VTEL and VSDM.

Drawdown Indicators

	VTEL	VSDM	Difference
Max Drawdown Largest peak-to-trough decline	-3.22%	-1.81%	-1.41%
Max Drawdown (1Y) Largest decline over 1 year	-3.22%	-1.46%	-1.76%
Current Drawdown Current decline from peak	-0.19%	-0.33%	+0.14%
Average Drawdown Average peak-to-trough decline	-0.59%	-0.32%	-0.27%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.90%	0.41%	+0.49%

Volatility

VTEL vs. VSDM - Volatility Comparison

Vanguard Long-Term Tax-Exempt Bond ETF (VTEL) has a higher volatility of 1.26% compared to Vanguard Short Duration Tax-Exempt Bond ETF (VSDM) at 0.45%. This indicates that VTEL'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

	VTEL	VSDM	Difference
Volatility (1M) Calculated over the trailing 1-month period	1.26%	0.45%	+0.81%
Volatility (6M) Calculated over the trailing 6-month period	2.64%	1.07%	+1.57%
Volatility (1Y) Calculated over the trailing 1-year period	3.75%	1.36%	+2.39%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	3.77%	1.96%	+1.81%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	3.77%	1.96%	+1.81%

VTEL vs. VSDM - Expense Ratio Comparison

VTEL has a 0.09% expense ratio, which is lower than VSDM's 0.12% expense ratio. Despite the difference, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.

Dividends

VTEL vs. VSDM - Dividend Comparison

VTEL's dividend yield for the trailing twelve months is around 3.81%, more than VSDM's 3.11% yield.

Position	TTM	2025	2024
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	3.11%	3.06%	0.35%
VTEL Vanguard Long-Term Tax-Exempt Bond ETF	3.81%	2.23%	0.00%

Frequently Asked Questions

Can I hold both VTEL and VSDM in my portfolio?

VTEL and VSDM 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, VTEL or VSDM?

VTEL has higher volatility (1.26%) compared to VSDM (0.45%). In terms of maximum drawdown, VTEL dropped -3.22% vs VSDM's -1.81%.

Which ETF is better, VTEL or VSDM?

On 1-year performance, VTEL leads with 8.64% vs 4.93% for VSDM. On fees, VTEL is cheaper at 0.09% per year. On volatility, VSDM has been the lower-risk option at 0.45%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, VTEL or VSDM?

Over the 1-year period, VTEL has performed better with a 8.64% return vs 4.93%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VTEL or VSDM?

VTEL is cheaper with a 0.09% expense ratio, compared with 0.12% for VSDM.

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

VTEL has the higher dividend yield at 3.81%, compared with 3.11% for VSDM.

What is the main difference between VTEL and VSDM?

Their fees differ too: 0.09% for VTEL and 0.12% for VSDM.

Which has better risk-adjusted returns?

VSDM currently has the higher Sharpe Ratio (3.62 vs 2.32), 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.