SCHX vs. VBR: What’s The Difference?

The Schwab U.S. Large-Cap ETF (SCHX) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between SCHX and VBR? And which fund is better?

The expense ratio of SCHX is 0.04 percentage points lower than VBR’s (0.03% vs. 0.07%). SCHX also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHX has provided higher returns than VBR over the past ten years.

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

Summary

SCHX VBR
Name Schwab U.S. Large-Cap ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Large Blend Small Value
Issuer Schwab ETFs Vanguard
AUM 30.89B 48.08B
Avg. Return 14.60% 12.28%
Div. Yield 1.41% 1.6%
Expense Ratio 0.03% 0.07%

The Schwab U.S. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

SCHX’s dividend yield is 0.19% lower than that of VBR (1.41% vs. 1.6%). Also, SCHX yielded on average 2.32% more per year over the past decade (14.60% vs. 12.28%). The expense ratio of SCHX is 0.04 percentage points lower than VBR’s (0.03% vs. 0.07%).

Fund Composition

Industry Exposure

SCHX vs. VBR - Industry Exposure

SCHX VBR
Technology 25.13% 8.39%
Industrials 8.65% 18.44%
Energy 2.72% 5.15%
Communication Services 11.26% 1.77%
Utilities 2.37% 3.65%
Healthcare 13.04% 7.16%
Consumer Defensive 5.97% 4.36%
Real Estate 3.13% 10.92%
Financial Services 13.82% 20.04%
Consumer Cyclical 11.63% 13.82%
Basic Materials 2.28% 6.31%

The Schwab U.S. Large-Cap ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.

SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

SCHX is 16.74% more exposed to the Technology sector than VBR (25.13% vs 8.39%). SCHX’s exposure to Financial Services and Healthcare stocks is 6.22% lower and 5.88% higher respectively (13.82% vs. 20.04% and 13.04% vs. 7.16%). In total, Utilities, Energy, and Real Estate also make up 11.50% less of the fund’s holdings compared to VBR (8.22% vs. 19.72%).

Holdings

SCHX - Holdings

SCHX Holdings Weight
Apple Inc 5.37%
Microsoft Corp 5.1%
Amazon.com Inc 3.69%
Facebook Inc A 2.08%
Alphabet Inc A 1.84%
Alphabet Inc Class C 1.78%
Berkshire Hathaway Inc Class B 1.32%
Tesla Inc 1.31%
NVIDIA Corp 1.25%
JPMorgan Chase & Co 1.18%

SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.

Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

SCHX VBR
Mean Return 1.24 1.08
R-squared 99.83 82.2
Std. Deviation 13.8 18.37
Alpha -0.14 -5.09
Beta 1.02 1.23
Sharpe Ratio 1.03 0.67
Treynor Ratio 14.06 9.15

The Schwab U.S. Large-Cap ETF (SCHX) has a R-squared of 99.83 with a Standard Deviation of 13.8 and a Alpha of -0.14. Its Treynor Ratio is 14.06 while SCHX’s Mean Return is 1.24. Furthermore, the fund has a Sharpe Ratio of 1.03 and a Beta of 1.02.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Treynor Ratio of 9.15 with a Beta of 1.23 and a Sharpe Ratio of 0.67. Its Standard Deviation is 18.37 while VBR’s Alpha is -5.09. Furthermore, the fund has a R-squared of 82.2 and a Mean Return of 1.08.

SCHX’s Mean Return is 0.16 points higher than that of VBR and its R-squared is 17.63 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than VBR. The Alpha and Beta of SCHX are 4.95 points higher and 0.21 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. VBR - Annual Returns

Year SCHX VBR
2020 20.9% 5.82%
2019 31.4% 22.76%
2018 -4.52% -12.22%
2017 21.91% 11.79%
2016 11.78% 24.8%
2015 1.02% -4.67%
2014 13.33% 10.55%
2013 32.54% 36.57%
2012 16.06% 18.78%
2011 1.61% -4.05%
2010 15.88% 24.97%

SCHX had its best year in 2013 with an annual return of 32.54%. SCHX’s worst year over the past decade yielded -4.52% and occurred in 2018. In most years the Schwab U.S. Large-Cap ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.33%, 15.88%, and 16.06% respectively.

The year 2013 was the strongest year for VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

SCHX vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
VBR $10,000 $26,095 12.28%

A $10,000 investment in SCHX would have resulted in a final balance of $36,987. This is a profit of $26,987 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.60%.

With a $10,000 investment in VBR, the end total would have been $26,095. This equates to a $16,095 profit over 10 years and a compound annual growth rate (CAGR) of 12.28%.

SCHX’s CAGR is 2.32 percentage points higher than that of VBR and as a result, would have yielded $10,892 more on a $10,000 investment. Thus, SCHX outperformed VBR by 2.32% annually.


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