The Schwab U.S. TIPS ETF (SCHP) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between SCHP and VOE? And which fund is better?
The expense ratio of SCHP is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%). SCHP is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, SCHP has provided lower returns than VOE over the past 10 years.
In this article, we’ll compare SCHP vs. VOE. We’ll look at performance and fund composition, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss SCHP’s and VOE’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| SCHP | VOE | |
| Name | Schwab U.S. TIPS ETF | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Inflation-Protected Bond | Mid-Cap Value |
| Issuer | Schwab ETFs | Vanguard |
| AUM | 18.41B | 26.78B |
| Avg. Return | 3.92% | 12.52% |
| Div. Yield | 1.97% | 1.87% |
| Expense Ratio | 0.05% | 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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
SCHP’s dividend yield is 0.10% higher than that of VOE (1.97% vs. 1.87%). Also, SCHP yielded on average 8.61% less per year over the past decade (3.92% vs. 12.52%). The expense ratio of SCHP is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%).
Fund Composition
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.
| VOE Holdings | Weight |
| Carrier Global Corp Ordinary Shares | 1.28% |
| International Flavors & Fragrances Inc | 1.13% |
| Motorola Solutions Inc | 1.12% |
| Discover Financial Services | 1.09% |
| Welltower Inc | 1.05% |
| Corteva Inc | 0.99% |
| Valero Energy Corp | 0.97% |
| Corning Inc | 0.95% |
| Willis Towers Watson PLC | 0.9% |
| D.R. Horton Inc | 0.89% |
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
Risk Analysis
| SCHP | VOE | |
| Mean Return | 0.28 | 1.05 |
| R-squared | 66.16 | 88.76 |
| Std. Deviation | 4.32 | 15.98 |
| Alpha | -0.5 | -3.77 |
| Beta | 1.17 | 1.11 |
| Sharpe Ratio | 0.64 | 0.75 |
| Treynor Ratio | 2.31 | 10.19 |
The Schwab U.S. TIPS ETF (SCHP) has a Sharpe Ratio of 0.64 with a Treynor Ratio of 2.31 and a Standard Deviation of 4.32. Its Alpha is -0.5 while SCHP’s R-squared is 66.16. Furthermore, the fund has a Beta of 1.17 and a Mean Return of 0.28.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Sharpe Ratio of 0.75 with a Beta of 1.11 and a Alpha of -3.77. Its R-squared is 88.76 while VOE’s Treynor Ratio is 10.19. Furthermore, the fund has a Mean Return of 1.05 and a Standard Deviation of 15.98.
SCHP’s Mean Return is 0.77 points lower than that of VOE and its R-squared is 22.60 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than VOE. The Alpha and Beta of SCHP are 3.27 points higher and 0.06 points higher than VOE’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHP | VOE |
| 2020 | 10.94% | 2.5% |
| 2019 | 8.36% | 27.98% |
| 2018 | -1.31% | -12.41% |
| 2017 | 2.95% | 17.05% |
| 2016 | 4.6% | 15.26% |
| 2015 | -1.5% | -1.8% |
| 2014 | 3.56% | 13.98% |
| 2013 | -8.66% | 37.65% |
| 2012 | 6.83% | 16.04% |
| 2011 | 13.38% | -0.32% |
| 2010 | 0.0% | 21.83% |
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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHP | $10,000 | $14,418 | 3.92% |
| VOE | $10,000 | $27,625 | 12.52% |
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 VOE, the end total would have been $27,625. This equates to a $17,625 profit over 10 years and a compound annual growth rate (CAGR) of 12.52%.
SCHP’s CAGR is 8.61 percentage points lower than that of VOE and as a result, would have yielded $13,207 less on a $10,000 investment. Thus, SCHP performed worse than VOE by 8.61% annually.
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