The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VBR and SCHP? And which fund is better?
The expense ratio of VBR is 0.02 percentage points higher than SCHP’s (0.07% vs. 0.05%). VBR also has a high exposure to the financial services sector while SCHP is mostly comprised of AAA bonds. Overall, VBR has provided higher returns than SCHP over the past 10 years.
In this article, we’ll compare VBR vs. SCHP. We’ll look at fund composition and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VBR’s and SCHP’s risk metrics, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Value Index Fund ETF Shares||Schwab U.S. TIPS ETF|
|Category||Small Value||Inflation-Protected Bond|
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. 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%.
VBR’s dividend yield is 0.37% lower than that of SCHP (1.6% vs. 1.97%). Also, VBR yielded on average 8.37% more per year over the past decade (12.28% vs. 3.92%). The expense ratio of VBR is 0.02 percentage points higher than SCHP’s (0.07% vs. 0.05%).
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|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|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%.
|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 Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Sharpe Ratio of 0.67 and a Beta of 1.23. Its R-squared is 82.2 while VBR’s Treynor Ratio is 9.15. Furthermore, the fund has a Alpha of -5.09 and a Mean Return of 1.08.
The Schwab U.S. TIPS ETF (SCHP) has a Standard Deviation of 4.32 with a Mean Return of 0.28 and a Sharpe Ratio of 0.64. Its Treynor Ratio is 2.31 while SCHP’s Beta is 1.17. Furthermore, the fund has a R-squared of 66.16 and a Alpha of -0.5.
VBR’s Mean Return is 0.80 points higher than that of SCHP and its R-squared is 16.04 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than SCHP. The Alpha and Beta of VBR are 4.59 points lower and 0.06 points higher than SCHP’s Alpha and Beta.
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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 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 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 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%.
VBR’s CAGR is 8.37 percentage points higher than that of SCHP and as a result, would have yielded $11,677 more on a $10,000 investment. Thus, VBR outperformed SCHP by 8.37% annually.
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