The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VB and SCHP? And which fund is better?
VB and SCHP have the same expense ratio: 0.05%. VB also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, VB has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare VB vs. SCHP. We’ll look at risk metrics and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VB’s and SCHP’s industry exposure, performance, and holdings and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||Schwab U.S. TIPS ETF|
|Category||Small Blend||Inflation-Protected Bond|
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
VB’s dividend yield is 0.83% lower than that of SCHP (1.14% vs. 1.97%). Also, VB yielded on average 10.34% more per year over the past decade (14.25% vs. 3.92%). VB and SCHP have the same expense ratio: 0.05%.
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|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%.
|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Sharpe Ratio of 0.74 with a Treynor Ratio of 10.15 and a Standard Deviation of 17.82. Its Alpha is -4.02 while VB’s R-squared is 85.03. Furthermore, the fund has a Mean Return of 1.15 and a Beta of 1.21.
The Schwab U.S. TIPS ETF (SCHP) has a Standard Deviation of 4.32 with a Sharpe Ratio of 0.64 and a Treynor Ratio of 2.31. Its R-squared is 66.16 while SCHP’s Beta is 1.17. Furthermore, the fund has a Mean Return of 0.28 and a Alpha of -0.5.
VB’s Mean Return is 0.87 points higher than that of SCHP and its R-squared is 18.87 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than SCHP. The Alpha and Beta of VB are 3.52 points lower and 0.04 points higher than SCHP’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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% 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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
VB’s CAGR is 10.34 percentage points higher than that of SCHP and as a result, would have yielded $16,651 more on a $10,000 investment. Thus, VB outperformed SCHP by 10.34% annually.
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