SCHB vs. VGK: What’s The Difference?

The Schwab U.S. Broad Market ETF (SCHB) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between SCHB and VGK? And which fund is better?

The expense ratio of SCHB is 0.05 percentage points lower than VGK’s (0.03% vs. 0.08%). SCHB also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHB has provided higher returns than VGK over the past 10 years.

In this article, we’ll compare SCHB vs. VGK. We’ll look at fund composition and holdings, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss SCHB’s and VGK’s annual returns, risk metrics, and performance and examine how these affect their overall returns.

Summary

SCHB VGK
Name Schwab U.S. Broad Market ETF Vanguard FTSE Europe Index Fund ETF Shares
Category Large Blend Europe Stock
Issuer Schwab ETFs Vanguard
AUM 21.44B 25.7B
Avg. Return 14.43% 6.68%
Div. Yield 1.39% 2.52%
Expense Ratio 0.03% 0.08%

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

SCHB’s dividend yield is 1.13% lower than that of VGK (1.39% vs. 2.52%). Also, SCHB yielded on average 7.75% more per year over the past decade (14.43% vs. 6.68%). The expense ratio of SCHB is 0.05 percentage points lower than VGK’s (0.03% vs. 0.08%).

Fund Composition

Industry Exposure

SCHB vs. VGK - Industry Exposure

SCHB VGK
Technology 24.15% 8.3%
Industrials 9.29% 15.58%
Energy 2.78% 4.3%
Communication Services 10.52% 5.09%
Utilities 2.32% 3.89%
Healthcare 13.37% 13.76%
Consumer Defensive 5.76% 11.39%
Real Estate 3.58% 2.57%
Financial Services 13.88% 15.85%
Consumer Cyclical 11.9% 11.6%
Basic Materials 2.45% 7.67%

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

SCHB is 15.85% more exposed to the Technology sector than VGK (24.15% vs 8.3%). SCHB’s exposure to Financial Services and Healthcare stocks is 1.97% lower and 0.39% lower respectively (13.88% vs. 15.85% and 13.37% vs. 13.76%). In total, Basic Materials, Energy, and Real Estate also make up 5.73% less of the fund’s holdings compared to VGK (8.81% vs. 14.54%).

Holdings

SCHB - Holdings

SCHB Holdings Weight
Apple Inc 4.86%
Microsoft Corp 4.61%
Amazon.com Inc 3.33%
Facebook Inc A 1.88%
Alphabet Inc A 1.66%
Alphabet Inc Class C 1.61%
Berkshire Hathaway Inc Class B 1.19%
Tesla Inc 1.18%
NVIDIA Corp 1.13%
JPMorgan Chase & Co 1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

Risk Analysis

SCHB VGK
Mean Return 1.23 0.61
R-squared 99.33 92.76
Std. Deviation 14.12 16.65
Alpha -0.58 0.45
Beta 1.04 1.06
Sharpe Ratio 1 0.4
Treynor Ratio 13.58 5.12

The Schwab U.S. Broad Market ETF (SCHB) has a R-squared of 99.33 with a Beta of 1.04 and a Alpha of -0.58. Its Mean Return is 1.23 while SCHB’s Sharpe Ratio is 1. Furthermore, the fund has a Standard Deviation of 14.12 and a Treynor Ratio of 13.58.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a R-squared of 92.76 with a Sharpe Ratio of 0.4 and a Standard Deviation of 16.65. Its Mean Return is 0.61 while VGK’s Treynor Ratio is 5.12. Furthermore, the fund has a Alpha of 0.45 and a Beta of 1.06.

SCHB’s Mean Return is 0.62 points higher than that of VGK and its R-squared is 6.57 points higher. With a Standard Deviation of 14.12, SCHB is slightly less volatile than VGK. The Alpha and Beta of SCHB are 1.03 points lower and 0.02 points lower than VGK’s Alpha and Beta.

Performance

Annual Returns

SCHB vs. VGK - Annual Returns

Year SCHB VGK
2020 20.77% 6.5%
2019 30.94% 24.26%
2018 -5.25% -14.79%
2017 21.18% 27.06%
2016 12.56% -0.59%
2015 0.45% -1.87%
2014 12.67% -6.56%
2013 33.37% 24.93%
2012 16.22% 21.01%
2011 1.4% -11.49%
2010 17.1% 5.01%

SCHB had its best year in 2013 with an annual return of 33.37%. SCHB’s worst year over the past decade yielded -5.25% and occurred in 2018. In most years the Schwab U.S. Broad Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.67%, 16.22%, and 17.1% respectively.

The year 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

SCHB vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
VGK $10,000 $17,475 6.68%

A $10,000 investment in SCHB would have resulted in a final balance of $36,354. This is a profit of $26,354 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.43%.

With a $10,000 investment in VGK, the end total would have been $17,475. This equates to a $7,475 profit over 10 years and a compound annual growth rate (CAGR) of 6.68%.

SCHB’s CAGR is 7.75 percentage points higher than that of VGK and as a result, would have yielded $18,879 more on a $10,000 investment. Thus, SCHB outperformed VGK by 7.75% annually.


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