SCHD vs. VGK: What’s The Difference?

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

The expense ratio of SCHD is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than VGK over the past 8 years.

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

Summary

SCHD VGK
Name Schwab U.S. Dividend Equity ETF Vanguard FTSE Europe Index Fund ETF Shares
Category Large Value Europe Stock
Issuer Schwab ETFs Vanguard
AUM 26B 25.7B
Avg. Return 14.80% 6.68%
Div. Yield 2.89% 2.52%
Expense Ratio 0.06% 0.08%

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%.

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%.

SCHD’s dividend yield is 0.37% higher than that of VGK (2.89% vs. 2.52%). Also, SCHD yielded on average 8.12% more per year over the past decade (14.80% vs. 6.68%). The expense ratio of SCHD is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%).

Fund Composition

Industry Exposure

SCHD vs. VGK - Industry Exposure

SCHD VGK
Technology 16.26% 8.3%
Industrials 18.05% 15.58%
Energy 1.87% 4.3%
Communication Services 4.96% 5.09%
Utilities 0.0% 3.89%
Healthcare 12.64% 13.76%
Consumer Defensive 14.04% 11.39%
Real Estate 0.0% 2.57%
Financial Services 21.69% 15.85%
Consumer Cyclical 8.36% 11.6%
Basic Materials 2.13% 7.67%

The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

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%.

SCHD is 5.84% more exposed to the Financial Services sector than VGK (21.69% vs 15.85%). SCHD’s exposure to Industrials and Technology stocks is 2.47% higher and 7.96% higher respectively (18.05% vs. 15.58% and 16.26% vs. 8.3%). In total, Utilities, Energy, and Basic Materials also make up 11.86% less of the fund’s holdings compared to VGK (4.00% vs. 15.86%).

Holdings

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
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%.

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

SCHD VGK
Mean Return 0 0.61
R-squared 0 92.76
Std. Deviation 0 16.65
Alpha 0 0.45
Beta 0 1.06
Sharpe Ratio 0 0.4
Treynor Ratio 0 5.12

The Schwab U.S. Dividend Equity ETF (SCHD) has a Standard Deviation of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its Mean Return is 0 while SCHD’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.

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

SCHD’s Mean Return is 0.61 points lower than that of VGK and its R-squared is 92.76 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than VGK. The Alpha and Beta of SCHD are 0.45 points lower and 1.06 points lower than VGK’s Alpha and Beta.

Performance

Annual Returns

SCHD vs. VGK - Annual Returns

Year SCHD VGK
2020 15.11% 6.5%
2019 27.28% 24.26%
2018 -5.46% -14.79%
2017 20.88% 27.06%
2016 16.25% -0.59%
2015 -0.21% -1.87%
2014 11.66% -6.56%
2013 32.9% 24.93%
2012 11.4% 21.01%
2011 0.0% -11.49%
2010 0.0% 5.01%

SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% 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

SCHD vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHD $10,000 $28,823 14.80%
VGK $10,000 $16,315 6.68%

A $10,000 investment in SCHD would have resulted in a final balance of $28,823. This is a profit of $18,823 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.80%.

With a $10,000 investment in VGK, the end total would have been $16,315. This equates to a $6,315 profit over 8 years and a compound annual growth rate (CAGR) of 6.68%.

SCHD’s CAGR is 8.12 percentage points higher than that of VGK and as a result, would have yielded $12,508 more on a $10,000 investment. Thus, SCHD outperformed VGK by 8.12% annually.


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