The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between BND and SCHF? And which fund is better?
The expense ratio of BND is 0.03 percentage points lower than SCHF’s (0.03% vs. 0.06%). BND is mostly comprised of AAA bonds while SCHF has a high exposure to the financial services sector. Overall, BND has provided lower returns than SCHF over the past ten years.
In this article, we’ll compare BND vs. SCHF. We’ll look at risk metrics and holdings, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss BND’s and SCHF’s performance, portfolio growth, and fund composition and examine how these affect their overall returns.
Summary
| BND | SCHF | |
| Name | Vanguard Total Bond Market Index Fund ETF Shares | Schwab International Equity ETF |
| Category | Intermediate-Term Bond | Foreign Large Blend |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 312.15B | 26.99B |
| Avg. Return | 4.09% | 6.43% |
| Div. Yield | 2.02% | 2.16% |
| Expense Ratio | 0.03% | 0.06% |
The Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.
BND’s dividend yield is 0.14% lower than that of SCHF (2.02% vs. 2.16%). Also, BND yielded on average 2.33% less per year over the past decade (4.09% vs. 6.43%). The expense ratio of BND is 0.03 percentage points lower than SCHF’s (0.03% vs. 0.06%).
Fund Composition
Holdings
| BND Bond Sectors | Weight |
| AAA | 68.72% |
| BBB | 16.17% |
| A | 11.87% |
| AA | 3.34% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
| Others | -0.11% |
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
| SCHF Holdings | Weight |
| Nestle SA | 1.66% |
| Samsung Electronics Co Ltd | 1.6% |
| ASML Holding NV | 1.29% |
| Roche Holding AG | 1.24% |
| Toyota Motor Corp | 1.02% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.93% |
| Novartis AG | 0.92% |
| Shopify Inc A | 0.78% |
| AstraZeneca PLC | 0.75% |
| SAP SE | 0.74% |
SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.
LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.
Risk Analysis
| BND | SCHF | |
| Mean Return | 0.28 | 0.58 |
| R-squared | 99.34 | 98.16 |
| Std. Deviation | 3.14 | 15.08 |
| Alpha | -0.14 | 0.53 |
| Beta | 1.04 | 0.99 |
| Sharpe Ratio | 0.88 | 0.42 |
| Treynor Ratio | 2.64 | 5.39 |
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Alpha of -0.14 with a R-squared of 99.34 and a Standard Deviation of 3.14. Its Sharpe Ratio is 0.88 while BND’s Beta is 1.04. Furthermore, the fund has a Mean Return of 0.28 and a Treynor Ratio of 2.64.
The Schwab International Equity ETF (SCHF) has a Mean Return of 0.58 with a Standard Deviation of 15.08 and a R-squared of 98.16. Its Alpha is 0.53 while SCHF’s Sharpe Ratio is 0.42. Furthermore, the fund has a Treynor Ratio of 5.39 and a Beta of 0.99.
BND’s Mean Return is 0.30 points lower than that of SCHF and its R-squared is 1.18 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than SCHF. The Alpha and Beta of BND are 0.67 points lower and 0.05 points higher than SCHF’s Alpha and Beta.
Performance
Annual Returns
| Year | BND | SCHF |
| 2020 | 7.71% | 9.86% |
| 2019 | 8.71% | 22.15% |
| 2018 | -0.04% | -14.39% |
| 2017 | 3.62% | 25.83% |
| 2016 | 2.57% | 2.88% |
| 2015 | 0.39% | -2.44% |
| 2014 | 5.96% | -4.44% |
| 2013 | -2.14% | 20.03% |
| 2012 | 4.04% | 17.12% |
| 2011 | 7.71% | -12.32% |
| 2010 | 6.51% | 8.6% |
BND had its best year in 2019 with an annual return of 8.71%. BND’s worst year over the past decade yielded -2.14% and occurred in 2013. In most years the Vanguard Total Bond Market Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.62%, 4.04%, and 5.96% respectively.
The year 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BND | $10,000 | $14,511 | 4.09% |
| SCHF | $10,000 | $17,089 | 6.43% |
A $10,000 investment in BND would have resulted in a final balance of $14,511. This is a profit of $4,511 over 10 years and amounts to a compound annual growth rate (CAGR) of 4.09%.
With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.
BND’s CAGR is 2.33 percentage points lower than that of SCHF and as a result, would have yielded $2,578 less on a $10,000 investment. Thus, BND performed worse than SCHF by 2.33% annually.
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