VBR vs. SCHA: What’s The Difference?

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VBR and SCHA? And which fund is better?

The expense ratio of VBR is 0.03 percentage points higher than SCHA’s (0.07% vs. 0.04%). VBR also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VBR has provided lower returns than SCHA over the past 10 years.

In this article, we’ll compare VBR vs. SCHA. We’ll look at performance and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VBR’s and SCHA’s holdings, portfolio growth, and industry exposure and examine how these affect their overall returns.

Summary

VBR SCHA
Name Vanguard Small-Cap Value Index Fund ETF Shares Schwab U.S. Small-Cap ETF
Category Small Value Small Blend
Issuer Vanguard Schwab ETFs
AUM 48.08B 16.51B
Avg. Return 12.28% 12.62%
Div. Yield 1.6% 0.98%
Expense Ratio 0.07% 0.04%

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

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%.

VBR’s dividend yield is 0.62% higher than that of SCHA (1.6% vs. 0.98%). Also, VBR yielded on average 0.34% less per year over the past decade (12.28% vs. 12.62%). The expense ratio of VBR is 0.03 percentage points higher than SCHA’s (0.07% vs. 0.04%).

Fund Composition

Industry Exposure

VBR vs. SCHA - Industry Exposure

VBR SCHA
Technology 8.39% 14.91%
Industrials 18.44% 15.37%
Energy 5.15% 3.35%
Communication Services 1.77% 3.5%
Utilities 3.65% 1.83%
Healthcare 7.16% 16.5%
Consumer Defensive 4.36% 3.75%
Real Estate 10.92% 7.83%
Financial Services 20.04% 14.49%
Consumer Cyclical 13.82% 14.48%
Basic Materials 6.31% 3.98%

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

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%.

VBR is 5.55% more exposed to the Financial Services sector than SCHA (20.04% vs 14.49%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 3.07% higher and 0.66% lower respectively (18.44% vs. 15.37% and 13.82% vs. 14.48%). In total, Utilities, Consumer Defensive, and Energy also make up 4.23% more of the fund’s holdings compared to SCHA (13.16% vs. 8.93%).

Holdings

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

SCHA - Holdings

SCHA Holdings Weight
AMC Entertainment Holdings Inc Class A 0.67%
Caesars Entertainment Inc 0.51%
Cloudflare Inc 0.48%
NovoCure Ltd 0.45%
Plug Power Inc 0.41%
10x Genomics Inc Ordinary Shares – Class A 0.34%
GameStop Corp Class A 0.28%
RH 0.27%
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%.

Risk Analysis

VBR SCHA
Mean Return 1.08 1.14
R-squared 82.2 82.26
Std. Deviation 18.37 18.68
Alpha -5.09 -4.65
Beta 1.23 1.25
Sharpe Ratio 0.67 0.7
Treynor Ratio 9.15 9.62

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Alpha of -5.09 and a Mean Return of 1.08. Its Beta is 1.23 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a R-squared of 82.2 and a Treynor Ratio of 9.15.

The Schwab U.S. Small-Cap ETF (SCHA) has a Sharpe Ratio of 0.7 with a Beta of 1.25 and a R-squared of 82.26. Its Standard Deviation is 18.68 while SCHA’s Treynor Ratio is 9.62. Furthermore, the fund has a Mean Return of 1.14 and a Alpha of -4.65.

VBR’s Mean Return is 0.06 points lower than that of SCHA and its R-squared is 0.06 points lower. With a Standard Deviation of 18.37, VBR is slightly less volatile than SCHA. The Alpha and Beta of VBR are 0.44 points lower and 0.02 points lower than SCHA’s Alpha and Beta.

Performance

Annual Returns

VBR vs. SCHA - Annual Returns

Year VBR SCHA
2020 5.82% 19.35%
2019 22.76% 26.54%
2018 -12.22% -11.75%
2017 11.79% 15.04%
2016 24.8% 19.88%
2015 -4.67% -4.24%
2014 10.55% 6.53%
2013 36.57% 39.59%
2012 18.78% 18.24%
2011 -4.05% -2.95%
2010 24.97% 28.31%

VBR had its best year in 2013 with an annual return of 36.57%. VBR’s worst year over the past decade yielded -12.22% and occurred in 2018. In most years the Vanguard Small-Cap Value Index Fund ETF Shares provided moderate returns such as in 2014, 2017, and 2012 where annual returns amounted to 10.55%, 11.79%, and 18.78% 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.

Portfolio Growth

VBR vs. SCHA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VBR $10,000 $26,095 12.28%
SCHA $10,000 $30,035 12.62%

A $10,000 investment in VBR would have resulted in a final balance of $26,095. This is a profit of $16,095 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.28%.

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%.

VBR’s CAGR is 0.34 percentage points lower than that of SCHA and as a result, would have yielded $3,940 less on a $10,000 investment. Thus, VBR performed worse than SCHA by 0.34% annually.


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