The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between VB and SCHF? And which fund is better?
The expense ratio of VB is 0.01 percentage points lower than SCHF’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 higher returns than SCHF over the past ten years.
In this article, we’ll compare VB vs. SCHF. We’ll look at holdings and performance, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VB’s and SCHF’s fund composition, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||Schwab International Equity ETF|
|Category||Small Blend||Foreign 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 International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.
VB’s dividend yield is 1.02% lower than that of SCHF (1.14% vs. 2.16%). Also, VB yielded on average 7.83% more per year over the past decade (14.25% vs. 6.43%). The expense ratio of VB is 0.01 percentage points lower than SCHF’s (0.05% vs. 0.06%).
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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 International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.
SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.
VB is 5.30% more exposed to the Technology sector than SCHF (16.85% vs 11.55%). VB’s exposure to Industrials and Healthcare stocks is 1.25% higher and 3.29% higher respectively (16.11% vs. 14.86% and 14.34% vs. 11.05%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.08% less of the fund’s holdings compared to SCHF (10.21% vs. 19.29%).
|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%.
|Samsung Electronics Co Ltd||1.6%|
|ASML Holding NV||1.29%|
|Roche Holding AG||1.24%|
|Toyota Motor Corp||1.02%|
|LVMH Moet Hennessy Louis Vuitton SE||0.93%|
|Shopify Inc A||0.78%|
SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.
LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a R-squared of 85.03 and a Beta of 1.21. Its Alpha is -4.02 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Treynor Ratio of 10.15 and a Standard Deviation of 17.82.
The Schwab International Equity ETF (SCHF) has a Mean Return of 0.58 with a Beta of 0.99 and a Treynor Ratio of 5.39. Its Standard Deviation is 15.08 while SCHF’s Alpha is 0.53. Furthermore, the fund has a Sharpe Ratio of 0.42 and a R-squared of 98.16.
VB’s Mean Return is 0.57 points higher than that of SCHF and its R-squared is 13.13 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than SCHF. The Alpha and Beta of VB are 4.55 points lower and 0.22 points higher than SCHF’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 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% 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 SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.
VB’s CAGR is 7.83 percentage points higher than that of SCHF and as a result, would have yielded $13,980 more on a $10,000 investment. Thus, VB outperformed SCHF by 7.83% annually.
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