SCHF vs. VBR: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between SCHF and VBR? And which fund is better?

The expense ratio of SCHF is 0.01 percentage points lower than VBR’s (0.06% vs. 0.07%). SCHF also has a lower exposure to the financial services sector and a lower standard deviation. Overall, SCHF has provided lower returns than VBR over the past 10 years.

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

Summary

SCHF VBR
Name Schwab International Equity ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Foreign Large Blend Small Value
Issuer Schwab ETFs Vanguard
AUM 26.99B 48.08B
Avg. Return 6.43% 12.28%
Div. Yield 2.16% 1.6%
Expense Ratio 0.06% 0.07%

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

SCHF’s dividend yield is 0.56% higher than that of VBR (2.16% vs. 1.6%). Also, SCHF yielded on average 5.85% less per year over the past decade (6.43% vs. 12.28%). The expense ratio of SCHF is 0.01 percentage points lower than VBR’s (0.06% vs. 0.07%).

Fund Composition

Industry Exposure

SCHF vs. VBR - Industry Exposure

SCHF VBR
Technology 11.55% 8.39%
Industrials 14.86% 18.44%
Energy 4.23% 5.15%
Communication Services 5.65% 1.77%
Utilities 3.09% 3.65%
Healthcare 11.05% 7.16%
Consumer Defensive 9.41% 4.36%
Real Estate 3.17% 10.92%
Financial Services 17.85% 20.04%
Consumer Cyclical 10.87% 13.82%
Basic Materials 8.26% 6.31%

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

SCHF is 2.19% less exposed to the Financial Services sector than VBR (17.85% vs 20.04%). SCHF’s exposure to Industrials and Technology stocks is 3.58% lower and 3.16% higher respectively (14.86% vs. 18.44% and 11.55% vs. 8.39%). In total, Real Estate, Energy, and Communication Services also make up 4.79% less of the fund’s holdings compared to VBR (13.05% vs. 17.84%).

Holdings

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

SCHF VBR
Mean Return 0.58 1.08
R-squared 98.16 82.2
Std. Deviation 15.08 18.37
Alpha 0.53 -5.09
Beta 0.99 1.23
Sharpe Ratio 0.42 0.67
Treynor Ratio 5.39 9.15

The Schwab International Equity ETF (SCHF) has a Beta of 0.99 with a Treynor Ratio of 5.39 and a Alpha of 0.53. Its Standard Deviation is 15.08 while SCHF’s R-squared is 98.16. Furthermore, the fund has a Mean Return of 0.58 and a Sharpe Ratio of 0.42.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Sharpe Ratio of 0.67 with a Treynor Ratio of 9.15 and a Alpha of -5.09. Its Standard Deviation is 18.37 while VBR’s R-squared is 82.2. Furthermore, the fund has a Mean Return of 1.08 and a Beta of 1.23.

SCHF’s Mean Return is 0.50 points lower than that of VBR and its R-squared is 15.96 points higher. With a Standard Deviation of 15.08, SCHF is slightly less volatile than VBR. The Alpha and Beta of SCHF are 5.62 points higher and 0.24 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. VBR - Annual Returns

Year SCHF VBR
2020 9.86% 5.82%
2019 22.15% 22.76%
2018 -14.39% -12.22%
2017 25.83% 11.79%
2016 2.88% 24.8%
2015 -2.44% -4.67%
2014 -4.44% 10.55%
2013 20.03% 36.57%
2012 17.12% 18.78%
2011 -12.32% -4.05%
2010 8.6% 24.97%

SCHF had its best year in 2017 with an annual return of 25.83%. SCHF’s worst year over the past decade yielded -14.39% and occurred in 2018. In most years the Schwab International Equity ETF provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.88%, 8.6%, and 9.86% respectively.

The year 2013 was the strongest year for VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

SCHF vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $17,089 6.43%
VBR $10,000 $26,095 12.28%

A $10,000 investment in SCHF would have resulted in a final balance of $17,089. This is a profit of $7,089 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.43%.

With a $10,000 investment in VBR, the end total would have been $26,095. This equates to a $16,095 profit over 10 years and a compound annual growth rate (CAGR) of 12.28%.

SCHF’s CAGR is 5.85 percentage points lower than that of VBR and as a result, would have yielded $9,006 less on a $10,000 investment. Thus, SCHF performed worse than VBR by 5.85% annually.


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