The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and VHT is a Vanguard Health fund. So, what’s the difference between SCHD and VHT? And which fund is better?
The expense ratio of SCHD is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided lower returns than VHT over the past 8 years.
In this article, we’ll compare SCHD vs. VHT. We’ll look at industry exposure and risk metrics, as well as at their performance and annual returns. Moreover, I’ll also discuss SCHD’s and VHT’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
|Name||Schwab U.S. Dividend Equity ETF||Vanguard Health Care Index Fund ETF Shares|
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 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%.
SCHD’s dividend yield is 1.74% higher than that of VHT (2.89% vs. 1.15%). Also, SCHD yielded on average 1.24% less per year over the past decade (14.80% vs. 16.04%). The expense ratio of SCHD is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%).
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 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%.
SCHD is 21.67% more exposed to the Financial Services sector than VHT (21.69% vs 0.02%). SCHD’s exposure to Industrials and Technology stocks is 18.00% higher and 16.21% higher respectively (18.05% vs. 0.05% and 16.26% vs. 0.05%). In total, Utilities, Energy, and Basic Materials also make up 3.69% more of the fund’s holdings compared to VHT (4.00% vs. 0.31%).
|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%.
|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%.
The Schwab U.S. Dividend Equity ETF (SCHD) has a R-squared of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its Beta is 0 while SCHD’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Sharpe Ratio of 1.13 with a Alpha of 7.99 and a Standard Deviation of 13.58. Its Beta is 0.75 while VHT’s Treynor Ratio is 20.74. Furthermore, the fund has a R-squared of 59.86 and a Mean Return of 1.33.
SCHD’s Mean Return is 1.33 points lower than that of VHT and its R-squared is 59.86 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than VHT. The Alpha and Beta of SCHD are 7.99 points lower and 0.75 points lower than VHT’s Alpha and Beta.
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 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 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 VHT, the end total would have been $34,801. This equates to a $24,801 profit over 8 years and a compound annual growth rate (CAGR) of 16.04%.
SCHD’s CAGR is 1.24 percentage points lower than that of VHT and as a result, would have yielded $5,978 less on a $10,000 investment. Thus, SCHD performed worse than VHT by 1.24% annually.
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