SCHF vs. VTIP: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between SCHF and VTIP? And which fund is better?

The expense ratio of SCHF is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%). SCHF also has a high exposure to the financial services sector while VTIP is mostly comprised of AAA bonds. Overall, SCHF has provided higher returns than VTIP over the past 7 years.

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

Summary

SCHF VTIP
Name Schwab International Equity ETF Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Category Foreign Large Blend Inflation-Protected Bond
Issuer Schwab ETFs Vanguard
AUM 26.99B 50.67B
Avg. Return 6.43% 1.79%
Div. Yield 2.16% 1.35%
Expense Ratio 0.06% 0.05%

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 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%.

SCHF’s dividend yield is 0.81% higher than that of VTIP (2.16% vs. 1.35%). Also, SCHF yielded on average 4.64% more per year over the past decade (6.43% vs. 1.79%). The expense ratio of SCHF is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%).

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Fund Composition

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%.

VTIP - Holdings

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.

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Risk Analysis

SCHF VTIP
Mean Return 0.58 0
R-squared 98.16 0
Std. Deviation 15.08 0
Alpha 0.53 0
Beta 0.99 0
Sharpe Ratio 0.42 0
Treynor Ratio 5.39 0

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

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Mean Return of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Treynor Ratio is 0 while VTIP’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.

SCHF’s Mean Return is 0.58 points higher than that of VTIP and its R-squared is 98.16 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than VTIP. The Alpha and Beta of SCHF are 0.53 points higher and 0.99 points higher than VTIP’s Alpha and Beta.

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Performance

Annual Returns

SCHF vs. VTIP - Annual Returns

Year SCHF VTIP
2020 9.86% 4.97%
2019 22.15% 4.83%
2018 -14.39% 0.54%
2017 25.83% 0.82%
2016 2.88% 2.71%
2015 -2.44% -0.15%
2014 -4.44% -1.17%
2013 20.03% -1.55%
2012 17.12% 0.0%
2011 -12.32% 0.0%
2010 8.6% 0.0%

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 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

SCHF vs. VTIP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $13,865 6.43%
VTIP $10,000 $11,305 1.79%

A $10,000 investment in SCHF would have resulted in a final balance of $13,865. This is a profit of $3,865 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.43%.

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%.

SCHF’s CAGR is 4.64 percentage points higher than that of VTIP and as a result, would have yielded $2,560 more on a $10,000 investment. Thus, SCHF outperformed VTIP by 4.64% annually.


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