The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between VB and SCHB? And which fund is better?
The expense ratio of VB is 0.02 percentage points higher than SCHB’s (0.05% vs. 0.03%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare VB vs. SCHB. We’ll look at holdings and annual returns, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss VB’s and SCHB’s performance, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||Schwab U.S. Broad Market ETF|
|Category||Small Blend||Large 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. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
VB’s dividend yield is 0.25% lower than that of SCHB (1.14% vs. 1.39%). Also, VB yielded on average 0.18% less per year over the past decade (14.25% vs. 14.43%). The expense ratio of VB is 0.02 percentage points higher than SCHB’s (0.05% vs. 0.03%).
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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. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.
SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.
VB is 7.30% less exposed to the Technology sector than SCHB (16.85% vs 24.15%). VB’s exposure to Industrials and Healthcare stocks is 6.82% higher and 0.97% higher respectively (16.11% vs. 9.29% and 14.34% vs. 13.37%). In total, Communication Services, Energy, and Consumer Defensive also make up 8.85% less of the fund’s holdings compared to SCHB (10.21% vs. 19.06%).
|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%.
|Facebook Inc A||1.88%|
|Alphabet Inc A||1.66%|
|Alphabet Inc Class C||1.61%|
|Berkshire Hathaway Inc Class B||1.19%|
|JPMorgan Chase & Co||1.06%|
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a Treynor Ratio of 10.15 and a Standard Deviation of 17.82. Its R-squared is 85.03 while VB’s Alpha is -4.02. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Beta of 1.21.
The Schwab U.S. Broad Market ETF (SCHB) has a Standard Deviation of 14.12 with a Mean Return of 1.23 and a Beta of 1.04. Its R-squared is 99.33 while SCHB’s Alpha is -0.58. Furthermore, the fund has a Sharpe Ratio of 1 and a Treynor Ratio of 13.58.
VB’s Mean Return is 0.08 points lower than that of SCHB and its R-squared is 14.30 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than SCHB. The Alpha and Beta of VB are 3.44 points lower and 0.17 points higher than SCHB’s Alpha and Beta.
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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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% 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 SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.
VB’s CAGR is 0.18 percentage points lower than that of SCHB and as a result, would have yielded $5,285 less on a $10,000 investment. Thus, VB performed worse than SCHB by 0.18% annually.
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