The Schwab U.S. Small-Cap ETF (SCHA) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and VHT is a Vanguard Health fund. So, what’s the difference between SCHA and VHT? And which fund is better?
The expense ratio of SCHA is 0.06 percentage points lower than VHT’s (0.04% vs. 0.1%). SCHA also has a lower exposure to the healthcare sector and a higher standard deviation. Overall, SCHA has provided lower returns than VHT over the past 10 years.
In this article, we’ll compare SCHA vs. VHT. We’ll look at industry exposure and annual returns, as well as at their risk metrics and holdings. Moreover, I’ll also discuss SCHA’s and VHT’s performance, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||Schwab U.S. Small-Cap ETF||Vanguard Health Care Index Fund ETF Shares|
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
The Vanguard Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
SCHA’s dividend yield is 0.17% lower than that of VHT (0.98% vs. 1.15%). Also, SCHA yielded on average 3.42% less per year over the past decade (12.62% vs. 16.04%). The expense ratio of SCHA is 0.06 percentage points lower than VHT’s (0.04% vs. 0.1%).
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The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
SCHA is 83.07% less exposed to the Healthcare sector than VHT (16.5% vs 99.57%). SCHA’s exposure to Industrials and Technology stocks is 15.32% higher and 14.86% higher respectively (15.37% vs. 0.05% and 14.91% vs. 0.05%). In total, Energy, Communication Services, and Consumer Defensive also make up 10.60% more of the fund’s holdings compared to VHT (10.60% vs. 0.00%).
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|Penn National Gaming Inc||0.27%|
|Axon Enterprise Inc||0.27%|
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a Alpha of -4.65 and a Sharpe Ratio of 0.7. Its R-squared is 82.26 while SCHA’s Standard Deviation is 18.68. Furthermore, the fund has a Beta of 1.25 and a Treynor Ratio of 9.62.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a R-squared of 59.86 with a Treynor Ratio of 20.74 and a Standard Deviation of 13.58. Its Alpha is 7.99 while VHT’s Beta is 0.75. Furthermore, the fund has a Mean Return of 1.33 and a Sharpe Ratio of 1.13.
SCHA’s Mean Return is 0.19 points lower than that of VHT and its R-squared is 22.40 points higher. With a Standard Deviation of 18.68, SCHA is slightly more volatile than VHT. The Alpha and Beta of SCHA are 12.64 points lower and 0.50 points higher than VHT’s Alpha and Beta.
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SCHA had its best year in 2013 with an annual return of 39.59%. SCHA’s worst year over the past decade yielded -11.75% and occurred in 2018. In most years the Schwab U.S. Small-Cap ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 15.04%, 18.24%, and 19.35% respectively.
The year 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SCHA would have resulted in a final balance of $30,035. This is a profit of $20,035 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.62%.
With a $10,000 investment in VHT, the end total would have been $45,829. This equates to a $35,829 profit over 10 years and a compound annual growth rate (CAGR) of 16.04%.
SCHA’s CAGR is 3.42 percentage points lower than that of VHT and as a result, would have yielded $15,794 less on a $10,000 investment. Thus, SCHA performed worse than VHT by 3.42% annually.
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