The Schwab U.S. Large-Cap Growth ETF (SCHG) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between SCHG and VBK? And which fund is better?
The expense ratio of SCHG is 0.03 percentage points lower than VBK’s (0.04% vs. 0.07%). SCHG also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHG has provided higher returns than VBK over the past 10 years.
In this article, we’ll compare SCHG vs. VBK. We’ll look at fund composition and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss SCHG’s and VBK’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
Summary
| SCHG | VBK | |
| Name | Schwab U.S. Large-Cap Growth ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Large Growth | Small Growth |
| Issuer | Schwab ETFs | Vanguard |
| AUM | 15.16B | 37.89B |
| Avg. Return | 17.81% | 16.53% |
| Div. Yield | 0.43% | 0.45% |
| Expense Ratio | 0.04% | 0.07% |
The Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
SCHG’s dividend yield is 0.02% lower than that of VBK (0.43% vs. 0.45%). Also, SCHG yielded on average 1.28% more per year over the past decade (17.81% vs. 16.53%). The expense ratio of SCHG is 0.03 percentage points lower than VBK’s (0.04% vs. 0.07%).
Fund Composition
Industry Exposure
| SCHG | VBK | |
| Technology | 39.21% | 27.87% |
| Industrials | 3.01% | 13.19% |
| Energy | 0.2% | 1.77% |
| Communication Services | 17.07% | 3.24% |
| Utilities | 0.0% | 0.32% |
| Healthcare | 12.05% | 23.24% |
| Consumer Defensive | 2.15% | 3.83% |
| Real Estate | 1.64% | 7.87% |
| Financial Services | 7.98% | 4.05% |
| Consumer Cyclical | 15.01% | 12.13% |
| Basic Materials | 1.68% | 2.49% |
The Schwab U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
SCHG is 11.34% more exposed to the Technology sector than VBK (39.21% vs 27.87%). SCHG’s exposure to Communication Services and Consumer Cyclical stocks is 13.83% higher and 2.88% higher respectively (17.07% vs. 3.24% and 15.01% vs. 12.13%). In total, Energy, Real Estate, and Basic Materials also make up 8.61% less of the fund’s holdings compared to VBK (3.52% vs. 12.13%).
Holdings
| SCHG Holdings | Weight |
| Apple Inc | 11.49% |
| Microsoft Corp | 10.91% |
| Amazon.com Inc | 7.89% |
| Facebook Inc A | 4.45% |
| Alphabet Inc A | 3.93% |
| Alphabet Inc Class C | 3.82% |
| Tesla Inc | 2.8% |
| NVIDIA Corp | 2.67% |
| Visa Inc Class A | 2.12% |
| UnitedHealth Group Inc | 2.02% |
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| SCHG | VBK | |
| Mean Return | 1.46 | 1.22 |
| R-squared | 92.92 | 80.56 |
| Std. Deviation | 14.78 | 17.95 |
| Alpha | 1.97 | -2.81 |
| Beta | 1.05 | 1.18 |
| Sharpe Ratio | 1.14 | 0.78 |
| Treynor Ratio | 16.3 | 11.18 |
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Sharpe Ratio of 1.14 with a R-squared of 92.92 and a Mean Return of 1.46. Its Beta is 1.05 while SCHG’s Treynor Ratio is 16.3. Furthermore, the fund has a Alpha of 1.97 and a Standard Deviation of 14.78.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Alpha of -2.81 with a Standard Deviation of 17.95 and a Beta of 1.18. Its R-squared is 80.56 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Mean Return of 1.22 and a Sharpe Ratio of 0.78.
SCHG’s Mean Return is 0.24 points higher than that of VBK and its R-squared is 12.36 points higher. With a Standard Deviation of 14.78, SCHG is slightly less volatile than VBK. The Alpha and Beta of SCHG are 4.78 points higher and 0.13 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHG | VBK |
| 2020 | 39.13% | 35.29% |
| 2019 | 36.21% | 32.75% |
| 2018 | -1.35% | -5.68% |
| 2017 | 28.04% | 21.9% |
| 2016 | 6.76% | 10.74% |
| 2015 | 3.26% | -2.51% |
| 2014 | 15.74% | 4.02% |
| 2013 | 33.96% | 38.18% |
| 2012 | 17.02% | 17.67% |
| 2011 | -0.67% | -1.43% |
| 2010 | 16.83% | 30.87% |
SCHG had its best year in 2020 with an annual return of 39.13%. SCHG’s worst year over the past decade yielded -1.35% and occurred in 2018. In most years the Schwab U.S. Large-Cap Growth ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 15.74%, 16.83%, and 17.02% respectively.
The year 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHG | $10,000 | $47,556 | 17.81% |
| VBK | $10,000 | $37,165 | 16.53% |
A $10,000 investment in SCHG would have resulted in a final balance of $47,556. This is a profit of $37,556 over 10 years and amounts to a compound annual growth rate (CAGR) of 17.81%.
With a $10,000 investment in VBK, the end total would have been $37,165. This equates to a $27,165 profit over 10 years and a compound annual growth rate (CAGR) of 16.53%.
SCHG’s CAGR is 1.28 percentage points higher than that of VBK and as a result, would have yielded $10,391 more on a $10,000 investment. Thus, SCHG outperformed VBK by 1.28% annually.
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