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SCHF vs. VHT: What’s The Difference?

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

The expense ratio of SCHF is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%). SCHF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, SCHF has provided lower returns than VHT over the past 10 years.

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

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Summary

SCHFVHT
NameSchwab International Equity ETFVanguard Health Care Index Fund ETF Shares
CategoryForeign Large BlendHealth
IssuerSchwab ETFsVanguard
AUM26.99B17.94B
Avg. Return6.43%16.04%
Div. Yield2.16%1.15%
Expense Ratio0.06%0.1%

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 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%.

SCHF’s dividend yield is 1.01% higher than that of VHT (2.16% vs. 1.15%). Also, SCHF yielded on average 9.61% less per year over the past decade (6.43% vs. 16.04%). The expense ratio of SCHF is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%).

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Fund Composition

Industry Exposure

SCHF vs. VHT - Industry Exposure

SCHFVHT
Technology11.55%0.05%
Industrials14.86%0.05%
Energy4.23%0.0%
Communication Services5.65%0.0%
Utilities3.09%0.0%
Healthcare11.05%99.57%
Consumer Defensive9.41%0.0%
Real Estate3.17%0.0%
Financial Services17.85%0.02%
Consumer Cyclical10.87%0.0%
Basic Materials8.26%0.31%

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 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%.

SCHF is 17.83% more exposed to the Financial Services sector than VHT (17.85% vs 0.02%). SCHF’s exposure to Industrials and Technology stocks is 14.81% higher and 11.50% higher respectively (14.86% vs. 0.05% and 11.55% vs. 0.05%). In total, Real Estate, Energy, and Communication Services also make up 13.05% more of the fund’s holdings compared to VHT (13.05% vs. 0.00%).

Holdings

SCHF - Holdings

SCHF HoldingsWeight
Nestle SA1.66%
Samsung Electronics Co Ltd1.6%
ASML Holding NV1.29%
Roche Holding AG1.24%
Toyota Motor Corp1.02%
LVMH Moet Hennessy Louis Vuitton SE0.93%
Novartis AG0.92%
Shopify Inc A0.78%
AstraZeneca PLC0.75%
SAP SE0.74%

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%.

VHT - Holdings

VHT HoldingsWeight
Johnson & Johnson7.34%
UnitedHealth Group Inc6.44%
Pfizer Inc3.7%
Abbott Laboratories3.48%
Thermo Fisher Scientific Inc3.37%
AbbVie Inc3.37%
Merck & Co Inc3.33%
Eli Lilly and Co3.17%
Danaher Corp2.91%
Medtronic PLC2.83%

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%.

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Risk Analysis

SCHFVHT
Mean Return0.581.33
R-squared98.1659.86
Std. Deviation15.0813.58
Alpha0.537.99
Beta0.990.75
Sharpe Ratio0.421.13
Treynor Ratio5.3920.74

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

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Standard Deviation of 13.58 with a Alpha of 7.99 and a Treynor Ratio of 20.74. Its Mean Return is 1.33 while VHT’s Sharpe Ratio is 1.13. Furthermore, the fund has a R-squared of 59.86 and a Beta of 0.75.

SCHF’s Mean Return is 0.75 points lower than that of VHT and its R-squared is 38.30 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than VHT. The Alpha and Beta of SCHF are 7.46 points lower and 0.24 points higher than VHT’s Alpha and Beta.

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Performance

Annual Returns

SCHF vs. VHT - Annual Returns

YearSCHFVHT
20209.86%18.21%
201922.15%21.97%
2018-14.39%5.55%
201725.83%23.34%
20162.88%-3.33%
2015-2.44%7.22%
2014-4.44%25.38%
201320.03%42.67%
201217.12%19.1%
2011-12.32%10.57%
20108.6%5.75%

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 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.

Portfolio Growth

SCHF vs. VHT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHF$10,000$17,0896.43%
VHT$10,000$45,82916.04%

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 VHT, the end total would have been $45,829. This equates to a $35,829 profit over 10 years and a compound annual growth rate (CAGR) of 16.04%.

SCHF’s CAGR is 9.61 percentage points lower than that of VHT and as a result, would have yielded $28,740 less on a $10,000 investment. Thus, SCHF performed worse than VHT by 9.61% annually.


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