FLDR vs VCSH

FLDR—Fidelity Low Duration Bond Factor ETF

VCSHAVanguard Short-Term Corporate Bond ETF

In short

FLDR Most ultra-short bond funds are parking lots for cash. FLDR is the rules-based one: a Fidelity index of roughly 250 investment-grade bonds built to keep interest-rate sensitivity low, priced under the typical ultra-short fund.

VCSH Corporate credit, kept short. VCSH tracks an index of investment-grade company bonds maturing in one to five years, at three basis points: you take company credit risk instead of government risk, with muted sensitivity to rate moves.

Stated mandate

FLDR The fund seeks to track, before fees and expenses, the performance of the Fidelity Low Duration Investment Grade Factor Index.

VCSH The fund seeks to follow a market-weighted corporate bond index with a short-term dollar-weighted average maturity, using index sampling and investing at least 80% of assets in index bonds.

Why people hold it

• FLDR Charges 0.15% a year, below the 0.20% median for ultra-short bond funds and level with top-ranked peers SHV, PULS and DUSB.
• Rules first, hunches never. It passively tracks the published Fidelity Low Duration Investment Grade Factor Index, so the recipe is written down.
• Pays monthly and spreads the work across about 250 investment-grade holdings, so no single issuer carries the portfolio.
• Live since 2018 and now a multi-billion-dollar fund, it stands among the stronger implementations in its ultra-short bond peer group.

• VCSH A 0.03% expense ratio, versus a 0.12% median across its peer group. That is Treasury-index pricing for a fund doing corporate credit work.
• Running since 2009 and now a multi-billion-dollar fund that trades actively, which is one of the easier profiles to get in and out of in its category.
• Samples the Bloomberg U.S. 1-5 Year Corporate Bond Index with at least 80% of assets in index bonds, and its book lines up closely with that benchmark.vanguard.com
• Distributions land monthly, not quarterly, and it sits among the strongest implementations in its cost-and-tracking peer group.

Worth knowing

• FLDR Low duration is not zero duration. The mandate keeps rate sensitivity short, but the share price still moves. This is a bond ETF, not a money market fund.
• The index is investment-grade credit, not pure government paper like SHV's Treasury sleeve, so credit conditions feed into the price.
• Moderately traded rather than a volume monster, so spreads can run wider than the largest cash-parking ETFs.

• VCSH These are company bonds, not government paper. Investment grade, but credit spreads can widen when markets get nervous, and Treasuries do not carry that risk.vanguard.com
• The one-to-five-year maturity band cuts both ways: smaller price swings when rates jump, and less duration to work with when rates fall.vanguard.com
• Index sampling means it holds a representative slice of the benchmark rather than every bond in it, so small differences from the index are normal.vanguard.com

Full FLDR profile⁠

Full VCSH profile⁠