VCIT vs. SCHF: What’s The Difference?

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between VCIT and SCHF? And which fund is better?

The expense ratio of VCIT is 0.01 percentage points lower than SCHF’s (0.05% vs. 0.06%). VCIT is mostly comprised of BBB bonds while SCHF has a high exposure to the financial services sector. Overall, VCIT has provided lower returns than SCHF over the past ten years.

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

Summary

VCIT SCHF
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Schwab International Equity ETF
Category Corporate Bond Foreign Large Blend
Issuer Vanguard Schwab ETFs
AUM 48.39B 26.99B
Avg. Return 5.84% 6.43%
Div. Yield 2.33% 2.16%
Expense Ratio 0.05% 0.06%

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% 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%.

VCIT’s dividend yield is 0.17% higher than that of SCHF (2.33% vs. 2.16%). Also, VCIT yielded on average 0.59% less per year over the past decade (5.84% vs. 6.43%). The expense ratio of VCIT is 0.01 percentage points lower than SCHF’s (0.05% vs. 0.06%).

Fund Composition

Holdings

VCIT - Holdings

VCIT Bond Sectors Weight
BBB 55.28%
A 37.85%
AA 5.22%
AAA 1.57%
Below B 0.08%
Others 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
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%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

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%.

Risk Analysis

VCIT SCHF
Mean Return 0.44 0.58
R-squared 63.18 98.16
Std. Deviation 5.08 15.08
Alpha 0.89 0.53
Beta 1.35 0.99
Sharpe Ratio 0.91 0.42
Treynor Ratio 3.43 5.39

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Standard Deviation of 5.08 with a Sharpe Ratio of 0.91 and a Mean Return of 0.44. Its Treynor Ratio is 3.43 while VCIT’s Beta is 1.35. Furthermore, the fund has a Alpha of 0.89 and a R-squared of 63.18.

The Schwab International Equity ETF (SCHF) has a Beta of 0.99 with a Alpha of 0.53 and a Treynor Ratio of 5.39. Its Mean Return is 0.58 while SCHF’s R-squared is 98.16. Furthermore, the fund has a Standard Deviation of 15.08 and a Sharpe Ratio of 0.42.

VCIT’s Mean Return is 0.14 points lower than that of SCHF and its R-squared is 34.98 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than SCHF. The Alpha and Beta of VCIT are 0.36 points higher and 0.36 points higher than SCHF’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. SCHF - Annual Returns

Year VCIT SCHF
2020 9.55% 9.86%
2019 13.97% 22.15%
2018 -1.75% -14.39%
2017 5.5% 25.83%
2016 5.3% 2.88%
2015 0.88% -2.44%
2014 7.47% -4.44%
2013 -1.8% 20.03%
2012 11.36% 17.12%
2011 7.94% -12.32%
2010 10.65% 8.6%

VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% 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.

Portfolio Growth

VCIT vs. SCHF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
SCHF $10,000 $17,089 6.43%

A $10,000 investment in VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

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%.

VCIT’s CAGR is 0.59 percentage points lower than that of SCHF and as a result, would have yielded $350 more on a $10,000 investment. Thus, VCIT performed worse than SCHF by 0.59% annually.


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