The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between BSV and SCHD? And which fund is better?
The expense ratio of BSV is 0.01 percentage points lower than SCHD’s (0.05% vs. 0.06%). BSV is mostly comprised of AAA bonds while SCHD has a high exposure to the financial services sector. Overall, BSV has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare BSV vs. SCHD. We’ll look at performance and holdings, as well as at their annual returns and fund composition. Moreover, I’ll also discuss BSV’s and SCHD’s portfolio growth, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||Schwab U.S. Dividend Equity ETF|
|Category||Short-Term Bond||Large Value|
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
BSV’s dividend yield is 1.41% lower than that of SCHD (1.48% vs. 2.89%). Also, BSV yielded on average 12.53% less per year over the past decade (2.27% vs. 14.80%). The expense ratio of BSV is 0.01 percentage points lower than SCHD’s (0.05% vs. 0.06%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
|Merck & Co Inc||4.24%|
|The Home Depot Inc||4.19%|
|Texas Instruments Inc||4.16%|
|Verizon Communications Inc||3.96%|
|Cisco Systems Inc||3.96%|
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Mean Return of 0.16 with a Standard Deviation of 1.33 and a R-squared of 78.38. Its Treynor Ratio is 3.33 while BSV’s Alpha is 0.21. Furthermore, the fund has a Sharpe Ratio of 0.98 and a Beta of 0.38.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Mean Return of 0 with a Beta of 0 and a Treynor Ratio of 0. Its Alpha is 0 while SCHD’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.
BSV’s Mean Return is 0.16 points higher than that of SCHD and its R-squared is 78.38 points higher. With a Standard Deviation of 1.33, BSV is slightly more volatile than SCHD. The Alpha and Beta of BSV are 0.21 points higher and 0.38 points higher than SCHD’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.
The year 2013 was the strongest year for SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BSV would have resulted in a final balance of $11,699. This is a profit of $1,699 over 8 years and amounts to a compound annual growth rate (CAGR) of 2.27%.
With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.
BSV’s CAGR is 12.53 percentage points lower than that of SCHD and as a result, would have yielded $17,124 less on a $10,000 investment. Thus, BSV performed worse than SCHD by 12.53% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.