The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between BND and SCHX? And which fund is better?
BND and SCHX have the same expense ratio: 0.03%. BND is mostly comprised of AAA bonds while SCHX has a high exposure to the technology sector. Overall, BND has provided lower returns than SCHX over the past ten years.
In this article, we’ll compare BND vs. SCHX. We’ll look at industry exposure and annual returns, as well as at their risk metrics and performance. Moreover, I’ll also discuss BND’s and SCHX’s holdings, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||Schwab U.S. Large-Cap ETF|
|Category||Intermediate-Term Bond||Large Blend|
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 U.S. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.
BND’s dividend yield is 0.61% higher than that of SCHX (2.02% vs. 1.41%). Also, BND yielded on average 10.51% less per year over the past decade (4.09% vs. 14.60%). BND and SCHX have the same expense ratio: 0.03%.
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|BND Bond Sectors||Weight|
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.
|Facebook Inc A||2.08%|
|Alphabet Inc A||1.84%|
|Alphabet Inc Class C||1.78%|
|Berkshire Hathaway Inc Class B||1.32%|
|JPMorgan Chase & Co||1.18%|
SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.
Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a R-squared of 99.34 with a Beta of 1.04 and a Mean Return of 0.28. Its Alpha is -0.14 while BND’s Treynor Ratio is 2.64. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Standard Deviation of 3.14.
The Schwab U.S. Large-Cap ETF (SCHX) has a Treynor Ratio of 14.06 with a Sharpe Ratio of 1.03 and a Standard Deviation of 13.8. Its Mean Return is 1.24 while SCHX’s Beta is 1.02. Furthermore, the fund has a Alpha of -0.14 and a R-squared of 99.83.
BND’s Mean Return is 0.96 points lower than that of SCHX and its R-squared is 0.49 points lower. With a Standard Deviation of 3.14, BND is slightly less volatile than SCHX. The Alpha and Beta of BND are 0.00 points lower and 0.02 points higher than SCHX’s Alpha and Beta.
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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 2013 was the strongest year for SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.
BND’s CAGR is 10.51 percentage points lower than that of SCHX and as a result, would have yielded $22,476 less on a $10,000 investment. Thus, BND performed worse than SCHX by 10.51% annually.
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