The Schwab U.S. Large-Cap ETF (SCHX) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between SCHX and VTIP? And which fund is better?
The expense ratio of SCHX is 0.02 percentage points lower than VTIP’s (0.03% vs. 0.05%). SCHX also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, SCHX has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare SCHX vs. VTIP. We’ll look at holdings and industry exposure, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss SCHX’s and VTIP’s fund composition, risk metrics, and performance and examine how these affect their overall returns.
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Summary
| SCHX | VTIP | |
| Name | Schwab U.S. Large-Cap ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Large Blend | Inflation-Protected Bond |
| Issuer | Schwab ETFs | Vanguard |
| AUM | 30.89B | 50.67B |
| Avg. Return | 14.60% | 1.79% |
| Div. Yield | 1.41% | 1.35% |
| Expense Ratio | 0.03% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
SCHX’s dividend yield is 0.06% higher than that of VTIP (1.41% vs. 1.35%). Also, SCHX yielded on average 12.81% more per year over the past decade (14.60% vs. 1.79%). The expense ratio of SCHX is 0.02 percentage points lower than VTIP’s (0.03% vs. 0.05%).
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Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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.
Risk Analysis
| SCHX | VTIP | |
| Mean Return | 1.24 | 0 |
| R-squared | 99.83 | 0 |
| Std. Deviation | 13.8 | 0 |
| Alpha | -0.14 | 0 |
| Beta | 1.02 | 0 |
| Sharpe Ratio | 1.03 | 0 |
| Treynor Ratio | 14.06 | 0 |
The Schwab U.S. Large-Cap ETF (SCHX) has a R-squared of 99.83 with a Sharpe Ratio of 1.03 and a Standard Deviation of 13.8. Its Alpha is -0.14 while SCHX’s Treynor Ratio is 14.06. Furthermore, the fund has a Mean Return of 1.24 and a Beta of 1.02.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Alpha is 0 while VTIP’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
SCHX’s Mean Return is 1.24 points higher than that of VTIP and its R-squared is 99.83 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than VTIP. The Alpha and Beta of SCHX are 0.14 points lower and 1.02 points higher than VTIP’s Alpha and Beta.
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Performance
Annual Returns
| Year | SCHX | VTIP |
| 2020 | 20.9% | 4.97% |
| 2019 | 31.4% | 4.83% |
| 2018 | -4.52% | 0.54% |
| 2017 | 21.91% | 0.82% |
| 2016 | 11.78% | 2.71% |
| 2015 | 1.02% | -0.15% |
| 2014 | 13.33% | -1.17% |
| 2013 | 32.54% | -1.55% |
| 2012 | 16.06% | 0.0% |
| 2011 | 1.61% | 0.0% |
| 2010 | 15.88% | 0.0% |
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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHX | $10,000 | $23,664 | 14.60% |
| VTIP | $10,000 | $11,305 | 1.79% |
A $10,000 investment in SCHX would have resulted in a final balance of $23,664. This is a profit of $13,664 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.60%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
SCHX’s CAGR is 12.81 percentage points higher than that of VTIP and as a result, would have yielded $12,359 more on a $10,000 investment. Thus, SCHX outperformed VTIP by 12.81% annually.
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