The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VB and SCHD? And which fund is better?
The expense ratio of VB is 0.01 percentage points lower than SCHD’s (0.05% vs. 0.06%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare VB vs. SCHD. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and holdings. Moreover, I’ll also discuss VB’s and SCHD’s risk metrics, performance, and annual returns and examine how these affect their overall returns.
Summary
| VB | SCHD | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Schwab U.S. Dividend Equity ETF |
| Category | Small Blend | Large Value |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 137.72B | 26B |
| Avg. Return | 14.25% | 14.80% |
| Div. Yield | 1.14% | 2.89% |
| Expense Ratio | 0.05% | 0.06% |
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. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
VB’s dividend yield is 1.75% lower than that of SCHD (1.14% vs. 2.89%). Also, VB yielded on average 0.55% less per year over the past decade (14.25% vs. 14.80%). The expense ratio of VB is 0.01 percentage points lower than SCHD’s (0.05% vs. 0.06%).
Fund Composition
Industry Exposure
| VB | SCHD | |
| Technology | 16.85% | 16.26% |
| Industrials | 16.11% | 18.05% |
| Energy | 3.67% | 1.87% |
| Communication Services | 2.4% | 4.96% |
| Utilities | 2.19% | 0.0% |
| Healthcare | 14.34% | 12.64% |
| Consumer Defensive | 4.14% | 14.04% |
| Real Estate | 9.56% | 0.0% |
| Financial Services | 13.06% | 21.69% |
| Consumer Cyclical | 13.03% | 8.36% |
| Basic Materials | 4.63% | 2.13% |
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. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
VB is 0.59% more exposed to the Technology sector than SCHD (16.85% vs 16.26%). VB’s exposure to Industrials and Healthcare stocks is 1.94% lower and 1.70% higher respectively (16.11% vs. 18.05% and 14.34% vs. 12.64%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.66% less of the fund’s holdings compared to SCHD (10.21% vs. 20.87%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
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%.
| SCHD Holdings | Weight |
| Merck & Co Inc | 4.24% |
| The Home Depot Inc | 4.19% |
| Texas Instruments Inc | 4.16% |
| Broadcom Inc | 4.15% |
| Amgen Inc | 4.11% |
| PepsiCo Inc | 4.09% |
| BlackRock Inc | 4.05% |
| Pfizer Inc | 3.97% |
| Verizon Communications Inc | 3.96% |
| Cisco Systems Inc | 3.96% |
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
Risk Analysis
| VB | SCHD | |
| Mean Return | 1.15 | 0 |
| R-squared | 85.03 | 0 |
| Std. Deviation | 17.82 | 0 |
| Alpha | -4.02 | 0 |
| Beta | 1.21 | 0 |
| Sharpe Ratio | 0.74 | 0 |
| Treynor Ratio | 10.15 | 0 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Sharpe Ratio of 0.74 with a Beta of 1.21 and a Treynor Ratio of 10.15. Its Standard Deviation is 17.82 while VB’s Alpha is -4.02. Furthermore, the fund has a R-squared of 85.03 and a Mean Return of 1.15.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Alpha of 0 with a Beta of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while SCHD’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.
VB’s Mean Return is 1.15 points higher than that of SCHD and its R-squared is 85.03 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than SCHD. The Alpha and Beta of VB are 4.02 points lower and 1.21 points higher than SCHD’s Alpha and Beta.
Performance
Annual Returns
| Year | VB | SCHD |
| 2020 | 19.08% | 15.11% |
| 2019 | 27.37% | 27.28% |
| 2018 | -9.3% | -5.46% |
| 2017 | 16.24% | 20.88% |
| 2016 | 18.31% | 16.25% |
| 2015 | -3.65% | -0.21% |
| 2014 | 7.51% | 11.66% |
| 2013 | 37.8% | 32.9% |
| 2012 | 18.22% | 11.4% |
| 2011 | -2.68% | 0.0% |
| 2010 | 27.89% | 0.0% |
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 SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $27,004 | 14.25% |
| SCHD | $10,000 | $28,823 | 14.80% |
A $10,000 investment in VB would have resulted in a final balance of $27,004. This is a profit of $17,004 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.
VB’s CAGR is 0.55 percentage points lower than that of SCHD and as a result, would have yielded $1,819 less on a $10,000 investment. Thus, VB performed worse than SCHD by 0.55% annually.
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