SCHP vs. VLUE: What’s The Difference?

The Schwab U.S. TIPS ETF (SCHP) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and VLUE is a iShares Large Value fund. So, what’s the difference between SCHP and VLUE? And which fund is better?

The expense ratio of SCHP is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%). SCHP is mostly comprised of AAA bonds while VLUE has a high exposure to the technology sector. Overall, SCHP has provided lower returns than VLUE over the past 7 years.

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

Summary

SCHP VLUE
Name Schwab U.S. TIPS ETF iShares MSCI USA Value Factor ETF
Category Inflation-Protected Bond Large Value
Issuer Schwab ETFs iShares
AUM 18.41B 15.95B
Avg. Return 3.92% 8.91%
Div. Yield 1.97% 1.89%
Expense Ratio 0.05% 0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

SCHP’s dividend yield is 0.08% higher than that of VLUE (1.97% vs. 1.89%). Also, SCHP yielded on average 5.00% less per year over the past decade (3.92% vs. 8.91%). The expense ratio of SCHP is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%).

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Fund Composition

Holdings

SCHP - Holdings

SCHP Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

SCHP VLUE
Mean Return 0.28 0
R-squared 66.16 0
Std. Deviation 4.32 0
Alpha -0.5 0
Beta 1.17 0
Sharpe Ratio 0.64 0
Treynor Ratio 2.31 0

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

The iShares MSCI USA Value Factor ETF (VLUE) has a R-squared of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.

SCHP’s Mean Return is 0.28 points higher than that of VLUE and its R-squared is 66.16 points higher. With a Standard Deviation of 4.32, SCHP is slightly more volatile than VLUE. The Alpha and Beta of SCHP are 0.50 points lower and 1.17 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

SCHP vs. VLUE - Annual Returns

Year SCHP VLUE
2020 10.94% -0.32%
2019 8.36% 27.47%
2018 -1.31% -11.18%
2017 2.95% 21.97%
2016 4.6% 15.68%
2015 -1.5% -3.54%
2014 3.56% 12.29%
2013 -8.66% 0.0%
2012 6.83% 0.0%
2011 13.38% 0.0%
2010 0.0% 0.0%

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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

SCHP vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHP $10,000 $13,032 3.92%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in SCHP would have resulted in a final balance of $13,032. This is a profit of $3,032 over 7 years and amounts to a compound annual growth rate (CAGR) of 3.92%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

SCHP’s CAGR is 5.00 percentage points lower than that of VLUE and as a result, would have yielded $4,215 less on a $10,000 investment. Thus, SCHP performed worse than VLUE by 5.00% annually.


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