SCHG vs. VHT: What’s The Difference?

The Schwab U.S. Large-Cap Growth ETF (SCHG) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and VHT is a Vanguard Health fund. So, what’s the difference between SCHG and VHT? And which fund is better?

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

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

Summary

SCHG VHT
Name Schwab U.S. Large-Cap Growth ETF Vanguard Health Care Index Fund ETF Shares
Category Large Growth Health
Issuer Schwab ETFs Vanguard
AUM 15.16B 17.94B
Avg. Return 17.81% 16.04%
Div. Yield 0.43% 1.15%
Expense Ratio 0.04% 0.1%

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 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%.

SCHG’s dividend yield is 0.72% lower than that of VHT (0.43% vs. 1.15%). Also, SCHG yielded on average 1.77% more per year over the past decade (17.81% vs. 16.04%). The expense ratio of SCHG is 0.06 percentage points lower than VHT’s (0.04% vs. 0.1%).

Fund Composition

Industry Exposure

SCHG vs. VHT - Industry Exposure

SCHG VHT
Technology 39.21% 0.05%
Industrials 3.01% 0.05%
Energy 0.2% 0.0%
Communication Services 17.07% 0.0%
Utilities 0.0% 0.0%
Healthcare 12.05% 99.57%
Consumer Defensive 2.15% 0.0%
Real Estate 1.64% 0.0%
Financial Services 7.98% 0.02%
Consumer Cyclical 15.01% 0.0%
Basic Materials 1.68% 0.31%

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 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%.

SCHG is 39.16% more exposed to the Technology sector than VHT (39.21% vs 0.05%). SCHG’s exposure to Communication Services and Consumer Cyclical stocks is 17.07% higher and 15.01% higher respectively (17.07% vs. 0.0% and 15.01% vs. 0.0%). In total, Energy, Real Estate, and Basic Materials also make up 3.21% more of the fund’s holdings compared to VHT (3.52% vs. 0.31%).

Holdings

SCHG - 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%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

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%.

Risk Analysis

SCHG VHT
Mean Return 1.46 1.33
R-squared 92.92 59.86
Std. Deviation 14.78 13.58
Alpha 1.97 7.99
Beta 1.05 0.75
Sharpe Ratio 1.14 1.13
Treynor Ratio 16.3 20.74

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Sharpe Ratio of 1.14 with a Mean Return of 1.46 and a Treynor Ratio of 16.3. Its R-squared is 92.92 while SCHG’s Alpha is 1.97. Furthermore, the fund has a Beta of 1.05 and a Standard Deviation of 14.78.

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

SCHG’s Mean Return is 0.13 points higher than that of VHT and its R-squared is 33.06 points higher. With a Standard Deviation of 14.78, SCHG is slightly more volatile than VHT. The Alpha and Beta of SCHG are 6.02 points lower and 0.30 points higher than VHT’s Alpha and Beta.

Performance

Annual Returns

SCHG vs. VHT - Annual Returns

Year SCHG VHT
2020 39.13% 18.21%
2019 36.21% 21.97%
2018 -1.35% 5.55%
2017 28.04% 23.34%
2016 6.76% -3.33%
2015 3.26% 7.22%
2014 15.74% 25.38%
2013 33.96% 42.67%
2012 17.02% 19.1%
2011 -0.67% 10.57%
2010 16.83% 5.75%

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 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

SCHG vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHG $10,000 $47,556 17.81%
VHT $10,000 $45,829 16.04%

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 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%.

SCHG’s CAGR is 1.77 percentage points higher than that of VHT and as a result, would have yielded $1,727 more on a $10,000 investment. Thus, SCHG outperformed VHT by 1.77% annually.


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