The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between SCHD and VTIP? And which fund is better?
The expense ratio of SCHD is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%). SCHD also has a high exposure to the financial services sector while VTIP is mostly comprised of AAA bonds. Overall, SCHD has provided higher returns than VTIP over the past 7 years.
In this article, we’ll compare SCHD vs. VTIP. We’ll look at performance and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss SCHD’s and VTIP’s risk metrics, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| SCHD | VTIP | |
| Name | Schwab U.S. Dividend Equity ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Large Value | Inflation-Protected Bond |
| Issuer | Schwab ETFs | Vanguard |
| AUM | 26B | 50.67B |
| Avg. Return | 14.80% | 1.79% |
| Div. Yield | 2.89% | 1.35% |
| Expense Ratio | 0.06% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
SCHD’s dividend yield is 1.54% higher than that of VTIP (2.89% vs. 1.35%). Also, SCHD yielded on average 13.01% more per year over the past decade (14.80% vs. 1.79%). The expense ratio of SCHD is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%).
Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| SCHD | VTIP | |
| 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 Mean Return of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Beta is 0 while SCHD’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Standard Deviation of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while VTIP’s R-squared is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.
SCHD’s Mean Return is 0.00 points lower than that of VTIP and its R-squared is 0.00 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than VTIP. The Alpha and Beta of SCHD are 0.00 points lower and 0.00 points lower than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHD | VTIP |
| 2020 | 15.11% | 4.97% |
| 2019 | 27.28% | 4.83% |
| 2018 | -5.46% | 0.54% |
| 2017 | 20.88% | 0.82% |
| 2016 | 16.25% | 2.71% |
| 2015 | -0.21% | -0.15% |
| 2014 | 11.66% | -1.17% |
| 2013 | 32.9% | -1.55% |
| 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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHD | $10,000 | $21,688 | 14.80% |
| VTIP | $10,000 | $11,305 | 1.79% |
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
SCHD’s CAGR is 13.01 percentage points higher than that of VTIP and as a result, would have yielded $10,383 more on a $10,000 investment. Thus, SCHD outperformed VTIP by 13.01% annually.
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