SCHX vs. VHT: What’s The Difference?

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

The expense ratio of SCHX is 0.07 percentage points lower than VHT’s (0.03% vs. 0.1%). SCHX also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHX has provided lower returns than VHT over the past ten years.

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

Summary

SCHX VHT
Name Schwab U.S. Large-Cap ETF Vanguard Health Care Index Fund ETF Shares
Category Large Blend Health
Issuer Schwab ETFs Vanguard
AUM 30.89B 17.94B
Avg. Return 14.60% 16.04%
Div. Yield 1.41% 1.15%
Expense Ratio 0.03% 0.1%

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 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%.

SCHX’s dividend yield is 0.26% higher than that of VHT (1.41% vs. 1.15%). Also, SCHX yielded on average 1.44% less per year over the past decade (14.60% vs. 16.04%). The expense ratio of SCHX is 0.07 percentage points lower than VHT’s (0.03% vs. 0.1%).

Fund Composition

Industry Exposure

SCHX vs. VHT - Industry Exposure

SCHX VHT
Technology 25.13% 0.05%
Industrials 8.65% 0.05%
Energy 2.72% 0.0%
Communication Services 11.26% 0.0%
Utilities 2.37% 0.0%
Healthcare 13.04% 99.57%
Consumer Defensive 5.97% 0.0%
Real Estate 3.13% 0.0%
Financial Services 13.82% 0.02%
Consumer Cyclical 11.63% 0.0%
Basic Materials 2.28% 0.31%

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 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%.

SCHX is 25.08% more exposed to the Technology sector than VHT (25.13% vs 0.05%). SCHX’s exposure to Financial Services and Healthcare stocks is 13.80% higher and 86.53% lower respectively (13.82% vs. 0.02% and 13.04% vs. 99.57%). In total, Utilities, Energy, and Real Estate also make up 8.22% more of the fund’s holdings compared to VHT (8.22% vs. 0.00%).

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%.

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

SCHX VHT
Mean Return 1.24 1.33
R-squared 99.83 59.86
Std. Deviation 13.8 13.58
Alpha -0.14 7.99
Beta 1.02 0.75
Sharpe Ratio 1.03 1.13
Treynor Ratio 14.06 20.74

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

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

SCHX’s Mean Return is 0.09 points lower than that of VHT and its R-squared is 39.97 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than VHT. The Alpha and Beta of SCHX are 8.13 points lower and 0.27 points higher than VHT’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. VHT - Annual Returns

Year SCHX VHT
2020 20.9% 18.21%
2019 31.4% 21.97%
2018 -4.52% 5.55%
2017 21.91% 23.34%
2016 11.78% -3.33%
2015 1.02% 7.22%
2014 13.33% 25.38%
2013 32.54% 42.67%
2012 16.06% 19.1%
2011 1.61% 10.57%
2010 15.88% 5.75%

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 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

SCHX vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
VHT $10,000 $45,829 16.04%

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 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%.

SCHX’s CAGR is 1.44 percentage points lower than that of VHT and as a result, would have yielded $8,842 less on a $10,000 investment. Thus, SCHX performed worse than VHT by 1.44% annually.


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