SCHD vs. VLUE: What’s The Difference?

The Schwab U.S. Dividend Equity ETF (SCHD) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and VLUE is a iShares Large Value fund. So, what’s the difference between SCHD and VLUE? And which fund is better?

The expense ratio of SCHD is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than VLUE over the past 7 years.

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

Summary

SCHD VLUE
Name Schwab U.S. Dividend Equity ETF iShares MSCI USA Value Factor ETF
Category Large Value Large Value
Issuer Schwab ETFs iShares
AUM 26B 15.95B
Avg. Return 14.80% 8.91%
Div. Yield 2.89% 1.89%
Expense Ratio 0.06% 0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

SCHD’s dividend yield is 1.00% higher than that of VLUE (2.89% vs. 1.89%). Also, SCHD yielded on average 5.89% more per year over the past decade (14.80% vs. 8.91%). The expense ratio of SCHD is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%).

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Fund Composition

Industry Exposure

SCHD vs. VLUE - Industry Exposure

SCHD VLUE
Technology 16.26% 26.89%
Industrials 18.05% 9.14%
Energy 1.87% 2.42%
Communication Services 4.96% 10.39%
Utilities 0.0% 2.68%
Healthcare 12.64% 14.31%
Consumer Defensive 14.04% 7.22%
Real Estate 0.0% 3.19%
Financial Services 21.69% 10.96%
Consumer Cyclical 8.36% 10.66%
Basic Materials 2.13% 2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

SCHD is 10.73% more exposed to the Financial Services sector than VLUE (21.69% vs 10.96%). SCHD’s exposure to Industrials and Technology stocks is 8.91% higher and 10.63% lower respectively (18.05% vs. 9.14% and 16.26% vs. 26.89%). In total, Utilities, Energy, and Basic Materials also make up 3.24% less of the fund’s holdings compared to VLUE (4.00% vs. 7.24%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

SCHD VLUE
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

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

The iShares MSCI USA Value Factor ETF (VLUE) has a Beta of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Mean Return is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Sharpe Ratio of 0.

SCHD’s Mean Return is 0.00 points lower than that of VLUE and its R-squared is 0.00 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than VLUE. The Alpha and Beta of SCHD are 0.00 points lower and 0.00 points lower than VLUE’s Alpha and Beta.

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Performance

Annual Returns

SCHD vs. VLUE - Annual Returns

Year SCHD VLUE
2020 15.11% -0.32%
2019 27.28% 27.47%
2018 -5.46% -11.18%
2017 20.88% 21.97%
2016 16.25% 15.68%
2015 -0.21% -3.54%
2014 11.66% 12.29%
2013 32.9% 0.0%
2012 11.4% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

SCHD vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHD $10,000 $21,688 14.80%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in SCHD would have resulted in a final balance of $21,688. This is a profit of $11,688 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.80%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

SCHD’s CAGR is 5.89 percentage points higher than that of VLUE and as a result, would have yielded $4,441 more on a $10,000 investment. Thus, SCHD outperformed VLUE by 5.89% annually.


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