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SCHP vs. VBK: What’s The Difference?

The Schwab U.S. TIPS ETF (SCHP) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between SCHP and VBK? And which fund is better?

The expense ratio of SCHP is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%). SCHP is mostly comprised of AAA bonds while VBK has a high exposure to the technology sector. Overall, SCHP has provided lower returns than VBK over the past 10 years.

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

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Summary

SCHPVBK
NameSchwab U.S. TIPS ETFVanguard Small-Cap Growth Index Fund ETF Shares
CategoryInflation-Protected BondSmall Growth
IssuerSchwab ETFsVanguard
AUM18.41B37.89B
Avg. Return3.92%16.53%
Div. Yield1.97%0.45%
Expense Ratio0.05%0.07%

The Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.

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%.

SCHP’s dividend yield is 1.52% higher than that of VBK (1.97% vs. 0.45%). Also, SCHP yielded on average 12.61% less per year over the past decade (3.92% vs. 16.53%). The expense ratio of SCHP is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%).

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Fund Composition

Holdings

SCHP - Holdings

SCHP Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

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%.

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Risk Analysis

SCHPVBK
Mean Return0.281.22
R-squared66.1680.56
Std. Deviation4.3217.95
Alpha-0.5-2.81
Beta1.171.18
Sharpe Ratio0.640.78
Treynor Ratio2.3111.18

The Schwab U.S. TIPS ETF (SCHP) has a Alpha of -0.5 with a Standard Deviation of 4.32 and a R-squared of 66.16. Its Beta is 1.17 while SCHP’s Mean Return is 0.28. Furthermore, the fund has a Treynor Ratio of 2.31 and a Sharpe Ratio of 0.64.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Mean Return of 1.22 and a Sharpe Ratio of 0.78. Its R-squared is 80.56 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Alpha of -2.81 and a Beta of 1.18.

SCHP’s Mean Return is 0.94 points lower than that of VBK and its R-squared is 14.40 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than VBK. The Alpha and Beta of SCHP are 2.31 points higher and 0.01 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

SCHP vs. VBK - Annual Returns

YearSCHPVBK
202010.94%35.29%
20198.36%32.75%
2018-1.31%-5.68%
20172.95%21.9%
20164.6%10.74%
2015-1.5%-2.51%
20143.56%4.02%
2013-8.66%38.18%
20126.83%17.67%
201113.38%-1.43%
20100.0%30.87%

SCHP had its best year in 2011 with an annual return of 13.38%. SCHP’s worst year over the past decade yielded -8.66% and occurred in 2013. In most years the Schwab U.S. TIPS ETF provided moderate returns such as in 2017, 2014, and 2016 where annual returns amounted to 2.95%, 3.56%, and 4.6% 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

SCHP vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHP$10,000$14,4183.92%
VBK$10,000$37,16516.53%

A $10,000 investment in SCHP would have resulted in a final balance of $14,418. This is a profit of $4,418 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.92%.

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%.

SCHP’s CAGR is 12.61 percentage points lower than that of VBK and as a result, would have yielded $22,747 less on a $10,000 investment. Thus, SCHP performed worse than VBK by 12.61% annually.


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