The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VB and SCHA? And which fund is better?
The expense ratio of VB is 0.01 percentage points higher than SCHA’s (0.05% vs. 0.04%). VB also has a higher exposure to the technology sector and a lower standard deviation. Overall, VB has provided higher returns than SCHA over the past ten years.
In this article, we’ll compare VB vs. SCHA. We’ll look at risk metrics and portfolio growth, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VB’s and SCHA’s holdings, annual returns, and performance and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
|Name||Vanguard Small-Cap Index Fund ETF Shares||Schwab U.S. Small-Cap ETF|
|Category||Small Blend||Small Blend|
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
VB’s dividend yield is 0.16% higher than that of SCHA (1.14% vs. 0.98%). Also, VB yielded on average 1.63% more per year over the past decade (14.25% vs. 12.62%). The expense ratio of VB is 0.01 percentage points higher than SCHA’s (0.05% vs. 0.04%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
VB is 1.94% more exposed to the Technology sector than SCHA (16.85% vs 14.91%). VB’s exposure to Industrials and Healthcare stocks is 0.74% higher and 2.16% lower respectively (16.11% vs. 15.37% and 14.34% vs. 16.5%). In total, Communication Services, Energy, and Consumer Defensive also make up 0.39% less of the fund’s holdings compared to SCHA (10.21% vs. 10.60%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|Penn National Gaming Inc||0.27%|
|Axon Enterprise Inc||0.27%|
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Alpha of -4.02 with a Standard Deviation of 17.82 and a Mean Return of 1.15. Its R-squared is 85.03 while VB’s Beta is 1.21. Furthermore, the fund has a Treynor Ratio of 10.15 and a Sharpe Ratio of 0.74.
The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a Treynor Ratio of 9.62 and a Standard Deviation of 18.68. Its Sharpe Ratio is 0.7 while SCHA’s Alpha is -4.65. Furthermore, the fund has a R-squared of 82.26 and a Beta of 1.25.
VB’s Mean Return is 0.01 points higher than that of SCHA and its R-squared is 2.77 points higher. With a Standard Deviation of 17.82, VB is slightly less volatile than SCHA. The Alpha and Beta of VB are 0.63 points higher and 0.04 points lower than SCHA’s Alpha and Beta.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $31,069. This is a profit of $21,069 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
VB’s CAGR is 1.63 percentage points higher than that of SCHA and as a result, would have yielded $1,034 more on a $10,000 investment. Thus, VB outperformed SCHA by 1.63% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.