The Vanguard Short-Term Bond ETF (BSV -0.01%) is a popular exchange-traded fund (ETF) and one of the smaller Vanguard funds by assets under management. The ETF had $58.4 billion in assets under management as of early 2025.
The ETF was first launched in 2007. Its low cost and bond diversification could make it an intriguing choice for investors who want to gain broad exposure to the bond market. This guide will teach you everything you need to know about this Vanguard fund and how to invest in ETFs.
What is it?
What is the Vanguard Short-Term Bond ETF (BSV)?
The Vanguard Short-Term Bond ETF (BSV) is managed by The Vanguard Group, a top investment management company that provides financial services to individual investors, institutions, and financial professionals. Vanguard is known for its low-cost, long-term investment approach and offers a variety of investments, including mutual funds and ETFs.
This Vanguard ETF seeks to track the performance of the Bloomberg U.S. 1–5 Year Government/Credit Float Adjusted Index. This index includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade, international dollar-denominated bonds. These bonds are publicly issued, and all have maturities between one and five years.
This short-term bond ETF is passively managed using index sampling. This means that the fund aims to replicate the performance of the Bloomberg U.S. 1–5 Year Government/Credit Float Adjusted Index by buying a representative sample of the index's securities, rather than attempting to buy every single security in the index. This allows for lower management costs while still closely tracking the overall index performance.
Short-term bonds are debt securities that mature within a few years. They are issued by governments and companies. When a short-term bond matures, the issuer pays back the principal amount and any interest. These types of bonds tend to be less sensitive to interest rate changes than long-term bonds and can be easily liquidated.
Although short-term bonds are generally low-risk compared to long-term bonds or even individual stocks, investors should still consider their risk tolerance for interest rate and credit volatility. This ETF is targeted toward long-term investors. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.
Exchange-Traded Fund (ETF)
How to buy
How to buy the Vanguard Short-Term Bond ETF (BSV)
- Open your brokerage app: Log into your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker "BSV" or the ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings
Holdings of Vanguard Short-Term Bond ETF (BSV)
This bond ETF's total net assets were $58.4 billion as of January 2025. The ETF holds 2,779 bonds, compared to its benchmark, the Bloomberg U.S. 1–5 Year Government/Credit Float Adjusted Index, which holds 3,618 bonds.
The average effective maturity timeline for bonds held in the ETF is 2.8 years, while the average duration is 2.6 years. The top 10 holdings of early 2025 were:
| Holdings | % of funds* | Market value | Face amount | Coupon | Maturity date | CUSIP | SEDOL |
|---|---|---|---|---|---|---|---|
| United States Treasury Note/Bond (T) | 1.67% | $976,130,625.00 | $974,000,000.00 | 4.13% | 11/30/2029 | 91282CMA6 | BTG00V7 |
| United States Treasury Note/Bond (T) | 0.85% | $496,378,451.97 | $495,681,400.00 | 4.25% | 11/30/2026 | 91282CLY5 | BTG00T5 |
| United States Treasury Note/Bond (T) | 0.72% | $419,353,578.00 | $443,760,400.00 | 1.50% | 01/31/2027 | 912828Z78 | BKMH699 |
| United States Treasury Note/Bond (T) | 0.72% | $418,448,492.50 | $415,076,000.00 | 4.88% | 04/30/2026 | 91282CKK6 | BLDCKD2 |
| United States Treasury Note/Bond (T) | 0.71% | $416,941,175.63 | $414,609,000.00 | 4.63% | 06/30/2026 | 91282CKY6 | BRT7679 |
| United States Treasury Note/Bond (T) | 0.71% | $414,647,302.73 | $413,162,500.00 | 4.63% | 02/28/2026 | 91282CKB6 | BMG7NL0 |
| United States Treasury Note/Bond (T) | 0.70% | $406,589,859.77 | $403,125,500.00 | 4.88% | 05/31/2026 | 91282CKS9 | BS3FRT5 |
| United States Treasury Note/Bond (T) | 0.69% | $404,028,761.25 | $401,644,000.00 | 4.25% | 06/30/2029 | 91282CKX8 | BRT7668 |
| United States Treasury Note/Bond (T) | 0.69% | $400,472,444.38 | $402,106,000.00 | 4.00% | 07/31/2029 | 91282CLC3 | BRC1742 |
| United States Treasury Note/Bond (T) | 0.68% | $398,889,288.28 | $406,965,000.00 | 3.63% | 08/31/2029 | 91282CLK5 | BRBKHZ1 |
In early 2025, the weighted exposures of the bonds held in this ETF by credit quality were:
| Credit rating | % of fund |
|---|---|
| U.S. Government | 69.33% |
| A | 12.41% |
| BBB | 12.12% |
| AAA | 3.39% |
| AA | 2.73% |
| BB | 0.01% |
| NR | 0.00% |
The distribution of bonds by issuer type are as follows:
| Issuer | % of fund |
|---|---|
| Treasury / Agency | 69.33% |
| Industrial | 12.48% |
| Finance | 11.43% |
| Foreign | 4.96% |
| Utilities | 1.71% |
| Other | 0.09% |
The last table below shows the distribution of bonds by effective maturity:
| Maturity | % of fund |
|---|---|
| Under 1 Year | 0.07% |
| 1 - 2 Years | 31.37% |
| 2 - 3 Years | 24.22% |
| 3 - 4 Years | 22.48% |
| 4 - 5 Years | 20.52% |
| Over 5 Years | 1.34% |
Should I invest?
Should I invest in the Vanguard Short-Term Bond ETF (BSV)?
Investing and deciding where to put your cash to work is a personal decision. You want to ensure your portfolio aligns with your investing goals, personal values, and risk tolerance. With that in mind, there are numerous reasons you might determine that this Vanguard bond ETF is a solid choice for your portfolio.
If you want to invest in a sector ETF focused on a broad range of investment-grade U.S. government bonds, investment-grade corporate, and/or investment-grade international dollar-denominated bonds, a position in this ETF provides instant diversification and exposure to all of these bond sectors. Likewise, if you’re looking for a lower-risk, income-focused investment and you want a monthly income stream, this ETF offers both benefits.
On the other hand, if you prefer to handpick the bonds you invest, or want less exposure to certain bond sectors such as U.S. government bonds, you may prefer to take a small position in this ETF or look elsewhere.
Dividend
Does the Vanguard Short-Term Bond ETF (BSV) pay a dividend?
This bond ETF pays a dividend, which is distributed on a monthly basis, rather than a quarterly one as is common with many ETFs. Its yield is around 4%, compared to the 1.5% average of the typical stock trading on the S&P 500.
Expense ratio
What is the Vanguard Short-Term Bond ETF (BSV)’s expense ratio?
The Vanguard Short-Term Bond ETF has an expense ratio of 0.04%, which is much lower than average of 0.5%. For a $10,000 investment in this ETF, the annual fee charged by the firm would come to $4.
Expense Ratio
Historical performance
Historical performance of the Vanguard Short-Term Bond ETF (BSV)
This Vanguard ETF is designed to track the performance of the market-weighted bond index known as the Bloomberg U.S. 1–5 Year Government/Credit Float Adjusted Index. Let's see how the fund has delivered on that objective over the trailing one-, three-, five-, and 10-year periods.
| Metric | 1-year | 3-year | 5-year | 10-year |
|---|---|---|---|---|
| BSV (Market price) | 3.79% | 0.96% | 1.28% | 1.61% |
| BSV (NAV) | 3.75% | 0.93% | 1.27% | 1.61% |
| Benchmark | 3.76% | 0.94% | 1.29% | 1.66% |
| +/- Benchmark | -0.01% | -0.01% | -0.02% | -0.05% |
Related investing topics
The bottom line
The bottom line on the Vanguard Short-Term Bond ETF (BSV)
This Vanguard ETF can enable investors to gain immediate and wide-ranging exposure to numerous high-quality bonds that provide relatively consistent income. If you’re interested in investing in a lower-risk, stable investment, short-term bonds, the diversified basket of holdings contained in the Vanguard Short-Term Bond ETF can be an excellent option.
FAQs
Investing in Vanguard Short-Term Bond ETF FAQs
Does Vanguard have a short-term bond ETF?
The Vanguard Short-Term Bond ETF (BSV) provides exposure to a selection of investment-grade U.S. government bonds, investment-grade corporate, and/or investment-grade international dollar-denominated bonds, all with maturity dates between one and five years.
Is a short-term bond ETF a good investment?
Short-term bonds can hold steadier than long-term bonds in an elevated interest rate environment and have fewer price shifts. They can be a good investment. However, long-term bonds can magnify investor returns compared to short-term bonds because they have longer maturity timelines.
Do short-term bond ETFs pay dividends?
The Vanguard Short-Term Bond ETF (BSV) pays a monthly dividend.
