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BSV vs. SCHD: What’s The Difference?

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.

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

BSVSCHD
NameVanguard Short-Term Bond Index Fund ETF SharesSchwab U.S. Dividend Equity ETF
CategoryShort-Term BondLarge Value
IssuerVanguardSchwab ETFs
AUM67.71B26B
Avg. Return2.27%14.80%
Div. Yield1.48%2.89%
Expense Ratio0.05%0.06%

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%).

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Fund Composition

Holdings

BSV - Holdings

BSV Bond SectorsWeight
AAA71.65%
BBB13.08%
A11.95%
AA3.28%
Others0.03%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%

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.

SCHD - Holdings

SCHD HoldingsWeight
Merck & Co Inc4.24%
The Home Depot Inc4.19%
Texas Instruments Inc4.16%
Broadcom Inc4.15%
Amgen Inc4.11%
PepsiCo Inc4.09%
BlackRock Inc4.05%
Pfizer Inc3.97%
Verizon Communications Inc3.96%
Cisco Systems Inc3.96%

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%.

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Risk Analysis

BSVSCHD
Mean Return0.160
R-squared78.380
Std. Deviation1.330
Alpha0.210
Beta0.380
Sharpe Ratio0.980
Treynor Ratio3.330

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.

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Performance

Annual Returns

BSV vs. SCHD - Annual Returns

YearBSVSCHD
20204.67%15.11%
20194.92%27.28%
20181.34%-5.46%
20171.2%20.88%
20161.42%16.25%
20150.92%-0.21%
20141.32%11.66%
20130.17%32.9%
20121.98%11.4%
20113.04%0.0%
20104.0%0.0%

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.

Portfolio Growth

BSV vs. SCHD - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BSV$10,000$11,6992.27%
SCHD$10,000$28,82314.80%

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.


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