FLTB vs VCSH

FLTBDFidelity Limited Term Bond ETF

VCSHAVanguard Short-Term Corporate Bond ETF

In short

FLTB Fidelity's short-bond ETF skips the index rulebook: a manager team picks 1-5 year corporate credit, using Fidelity's own blended yardstick as a guide rather than a cage. One of the original active bond ETFs, running since 2014.

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

FLTB The fund is a shorter-duration, investment-grade bond strategy focused primarily on U.S. corporate credit.

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

• FLTB Actively run since its 2014 launch, with Fidelity's blended 1-5 year credit, government and high-yield composite used as a guide for allocation, not a set of tracking handcuffs.fidelity.com
• The mandate reaches past plain investment grade: the guiding blend carries a slice of short-dated BB-B high yield alongside 1-5 year corporate and government debt.fidelity.com
• Short maturities mean smaller price swings when rates move than longer-dated bond funds carry, and income is paid out monthly.
• Spreads its credit risk across roughly 500 positions, so no single issuer carries the portfolio.

• 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

• FLTB It charges 0.25% a year, above the cohort median, while index rivals like IGSB, SPIB and VCIT run a few basis points. Active management is what the extra buys.
• Moderately traded and mid-sized rather than a volume giant, so bid-ask spreads can run wider than at the largest corporate bond ETFs.
• The latitude to hold high yield and non-index sectors adds credit risk you would not get from a pure investment-grade tracker.fidelity.comfidelity.com 2

• 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 FLTB profile⁠

Full VCSH profile⁠