VTES vs. VSDM

Last updated Jun 19, 2026

VTES (Vanguard Short-Term Tax-Exempt Bond ETF) and VSDM (Vanguard Short Duration Tax-Exempt Bond ETF) are both Municipal Bonds funds from Vanguard. VTES is passively managed, while VSDM is actively managed. Over the past year, VTES returned 3.37% vs 4.49% for VSDM. A 0.63 correlation means they provide meaningful diversification when combined. VTES charges 0.07%/yr vs 0.12%/yr for VSDM.

Performance

VTES vs. VSDM - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard Short-Term Tax-Exempt Bond ETF (VTES) 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, VTES achieves a 0.76% return, which is significantly lower than VSDM's 1.26% return.

VTES

• 1D: 0.10%
• 1M: 0.75%
• YTD: 0.76%
• 6M: 0.98%
• 1Y: 3.37%
• 3Y*: 3.16%
• 5Y*: —
• 10Y*: —

VSDM

• 1D: -0.07%
• 1M: 0.68%
• YTD: 1.26%
• 6M: 1.50%
• 1Y: 4.49%
• 3Y*: —
• 5Y*: —
• 10Y*: —

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

VTES vs. VSDM - Yearly Performance Comparison

	2026 (YTD)	2025	2024
VTES Vanguard Short-Term Tax-Exempt Bond ETF	0.76%	4.19%	-0.03%
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	1.26%	5.39%	-0.10%

Correlation

The correlation between VTES and VSDM is 0.60, 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	0.60
Correlation (All Time) Calculated using the full available price history since Nov 21, 2024	0.63

The correlation between VTES and VSDM has been stable across timeframes, ranging from 0.60 to 0.63 - a consistent structural relationship.

Return for Risk

VTES vs. VSDM — Risk / Return Rank

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

VTES

VTES Risk / Return Rank: 73
VTES Sharpe Ratio Rank: 89
VTES Sortino Ratio Rank: 91
VTES Omega Ratio Rank: 94
VTES Calmar Ratio Rank: 49
VTES Martin Ratio Rank: 43

VSDM

VSDM Risk / Return Rank: 83
VSDM Sharpe Ratio Rank: 94
VSDM Sortino Ratio Rank: 95
VSDM Omega Ratio Rank: 97
VSDM Calmar Ratio Rank: 66
VSDM Martin Ratio Rank: 64

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.

VTES vs. VSDM - Risk-Adjusted Trends Comparison

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

	VTES	VSDM	Difference
Sharpe ratio: Return per unit of total volatility	2.72	3.32	-0.60
Sortino ratio: Return per unit of downside risk	3.93	4.81	-0.89
Omega ratio: Gain probability vs. loss probability	1.63	1.81	-0.18
Calmar ratio: Return relative to maximum drawdown	2.30	3.09	-0.78
Martin ratio: Return relative to average drawdown	6.63	10.78	-4.15

VTES vs. VSDM - Sharpe Ratio Comparison

The current VTES Sharpe Ratio is 2.72, which is comparable to the VSDM Sharpe Ratio of 3.32. The chart below compares the historical Sharpe Ratios of VTES 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

VTES vs. VSDM - Drawdown Comparison

The maximum VTES drawdown since its inception was -2.42%, which is greater than VSDM's maximum drawdown of -1.81%. Use the drawdown chart below to compare losses from any high point for VTES and VSDM.

Drawdown Indicators

	VTES	VSDM	Difference
Max Drawdown Largest peak-to-trough decline	-2.42%	-1.81%	-0.61%
Max Drawdown (1Y) Largest decline over 1 year	-1.47%	-1.46%	-0.01%
Max Drawdown (3Y) Largest decline over 3 years	-1.80%	—	—
Current Drawdown Current decline from peak	-0.52%	-0.29%	-0.23%
Average Drawdown Average peak-to-trough decline	-0.50%	-0.32%	-0.18%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.51%	0.42%	+0.09%

Volatility

VTES vs. VSDM - Volatility Comparison

The current volatility for Vanguard Short-Term Tax-Exempt Bond ETF (VTES) is 0.27%, while Vanguard Short Duration Tax-Exempt Bond ETF (VSDM) has a volatility of 0.35%. This indicates that VTES experiences smaller price fluctuations and is considered to be less risky than VSDM based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	VTES	VSDM	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.27%	0.35%	-0.08%
Volatility (6M) Calculated over the trailing 6-month period	0.98%	1.08%	-0.10%
Volatility (1Y) Calculated over the trailing 1-year period	1.24%	1.36%	-0.12%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	1.71%	1.93%	-0.22%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	1.71%	1.93%	-0.22%

VTES vs. VSDM - Expense Ratio Comparison

VTES has a 0.07% 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

VTES vs. VSDM - Dividend Comparison

VTES's dividend yield for the trailing twelve months is around 2.75%, less than VSDM's 3.10% yield.

Position	TTM	2025	2024	2023
VSDM Vanguard Short Duration Tax-Exempt Bond ETF	3.10%	3.06%	0.35%	0.00%
VTES Vanguard Short-Term Tax-Exempt Bond ETF	2.75%	2.77%	2.99%	2.03%

Frequently Asked Questions

Can I hold both VTES and VSDM in my portfolio?

VTES and VSDM have a correlation of 0.60, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VTES or VSDM?

VSDM has higher volatility (0.35%) compared to VTES (0.27%). In terms of maximum drawdown, VTES dropped -2.42% vs VSDM's -1.81%.

Which ETF is better, VTES or VSDM?

On 1-year performance, VSDM leads with 4.49% vs 3.37% for VTES. On fees, VTES is cheaper at 0.07% per year. Their volatility is very similar. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, VTES or VSDM?

Over the 1-year period, VSDM has performed better with a 4.49% return vs 3.37%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VTES or VSDM?

VTES is cheaper with a 0.07% expense ratio, compared with 0.12% for VSDM.

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

VSDM has the higher dividend yield at 3.10%, compared with 2.75% for VTES.

What is the main difference between VTES and VSDM?

Their fees differ too: 0.07% for VTES and 0.12% for VSDM.

Which has better risk-adjusted returns?

VSDM currently has the higher Sharpe Ratio (3.32 vs 2.72), 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.