FLTR vs VCSH

FLTR—VanEck IG Floating Rate ETF

VCSHAVanguard Short-Term Corporate Bond ETF

In short

FLTR One of the first corporate floating-rate note ETFs to list, back in April 2011. Coupons reset periodically, so rate sensitivity stays minimal, and its index can hold notes maturing anywhere from 6 months out to 30 years.

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

FLTR The fund seeks to track the MVIS US Investment Grade Floating Rate Index before fees and expenses. The index comprises U.S.-dollar floating-rate notes from investment-grade corporate issuers.

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

• FLTR Floating coupons reset periodically, so the portfolio carries little interest-rate duration while staying in investment-grade corporate credit.vaneck.com
• Index rules run wide: USD notes from investment-grade corporate issuers, at least $300 million outstanding, 6 months to 30 years to maturity.marketvector.com
• 0.14% a year, a shade under the typical fee in its short-duration IG corporate group, spread across about 400 notes with monthly distributions.
• Has tracked its named index closely, and sits in the top quartile of its short-duration investment-grade corporate 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

• FLTR Rate duration is near zero, credit risk is not: these are corporate notes, and floating-rate issuance skews toward banks and financial firms.marketvector.com
• Plain short-term corporate funds cost far less (VCSH at 0.03%, IGSB at 0.04%), though they take on the rate duration this one sheds.
• Income floats. Coupons reset with short-term rates, so the monthly payout moves up and down with them.vaneck.com

• 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 FLTR profile⁠

Full VCSH profile⁠