The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between VBR and SCHB? And which fund is better?
The expense ratio of VBR is 0.04 percentage points higher than SCHB’s (0.07% vs. 0.03%). VBR also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided lower returns than SCHB over the past 10 years.
In this article, we’ll compare VBR vs. SCHB. We’ll look at portfolio growth and annual returns, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VBR’s and SCHB’s performance, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| VBR | SCHB | |
| Name | Vanguard Small-Cap Value Index Fund ETF Shares | Schwab U.S. Broad Market ETF |
| Category | Small Value | Large Blend |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 48.08B | 21.44B |
| Avg. Return | 12.28% | 14.43% |
| Div. Yield | 1.6% | 1.39% |
| Expense Ratio | 0.07% | 0.03% |
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. 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%.
VBR’s dividend yield is 0.21% higher than that of SCHB (1.6% vs. 1.39%). Also, VBR yielded on average 2.15% less per year over the past decade (12.28% vs. 14.43%). The expense ratio of VBR is 0.04 percentage points higher than SCHB’s (0.07% vs. 0.03%).
Fund Composition
Industry Exposure
| VBR | SCHB | |
| Technology | 8.39% | 24.15% |
| Industrials | 18.44% | 9.29% |
| Energy | 5.15% | 2.78% |
| Communication Services | 1.77% | 10.52% |
| Utilities | 3.65% | 2.32% |
| Healthcare | 7.16% | 13.37% |
| Consumer Defensive | 4.36% | 5.76% |
| Real Estate | 10.92% | 3.58% |
| Financial Services | 20.04% | 13.88% |
| Consumer Cyclical | 13.82% | 11.9% |
| Basic Materials | 6.31% | 2.45% |
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. 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%.
VBR is 6.16% more exposed to the Financial Services sector than SCHB (20.04% vs 13.88%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 9.15% higher and 1.92% higher respectively (18.44% vs. 9.29% and 13.82% vs. 11.9%). In total, Utilities, Consumer Defensive, and Energy also make up 2.30% more of the fund’s holdings compared to SCHB (13.16% vs. 10.86%).
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%.
| SCHB Holdings | Weight |
| Apple Inc | 4.86% |
| Microsoft Corp | 4.61% |
| Amazon.com Inc | 3.33% |
| Facebook Inc A | 1.88% |
| Alphabet Inc A | 1.66% |
| Alphabet Inc Class C | 1.61% |
| Berkshire Hathaway Inc Class B | 1.19% |
| Tesla Inc | 1.18% |
| NVIDIA Corp | 1.13% |
| 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%.
Risk Analysis
| VBR | SCHB | |
| Mean Return | 1.08 | 1.23 |
| R-squared | 82.2 | 99.33 |
| Std. Deviation | 18.37 | 14.12 |
| Alpha | -5.09 | -0.58 |
| Beta | 1.23 | 1.04 |
| Sharpe Ratio | 0.67 | 1 |
| Treynor Ratio | 9.15 | 13.58 |
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 Treynor Ratio of 9.15. 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 Mean Return of 1.08.
The Schwab U.S. Broad Market ETF (SCHB) has a Treynor Ratio of 13.58 with a Sharpe Ratio of 1 and a Alpha of -0.58. Its Mean Return is 1.23 while SCHB’s R-squared is 99.33. Furthermore, the fund has a Beta of 1.04 and a Standard Deviation of 14.12.
VBR’s Mean Return is 0.15 points lower than that of SCHB and its R-squared is 17.13 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than SCHB. The Alpha and Beta of VBR are 4.51 points lower and 0.19 points higher than SCHB’s Alpha and Beta.
Performance
Annual Returns
| Year | VBR | SCHB |
| 2020 | 5.82% | 20.77% |
| 2019 | 22.76% | 30.94% |
| 2018 | -12.22% | -5.25% |
| 2017 | 11.79% | 21.18% |
| 2016 | 24.8% | 12.56% |
| 2015 | -4.67% | 0.45% |
| 2014 | 10.55% | 12.67% |
| 2013 | 36.57% | 33.37% |
| 2012 | 18.78% | 16.22% |
| 2011 | -4.05% | 1.4% |
| 2010 | 24.97% | 17.1% |
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 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VBR | $10,000 | $26,095 | 12.28% |
| SCHB | $10,000 | $36,354 | 14.43% |
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 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%.
VBR’s CAGR is 2.15 percentage points lower than that of SCHB and as a result, would have yielded $10,259 less on a $10,000 investment. Thus, VBR performed worse than SCHB by 2.15% annually.
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