VCIT vs. SCHG: What’s The Difference?

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between VCIT and SCHG? And which fund is better?

The expense ratio of VCIT is 0.01 percentage points higher than SCHG’s (0.05% vs. 0.04%). VCIT is mostly comprised of BBB bonds while SCHG has a high exposure to the technology sector. Overall, VCIT has provided lower returns than SCHG over the past ten years.

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

Summary

VCIT SCHG
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Schwab U.S. Large-Cap Growth ETF
Category Corporate Bond Large Growth
Issuer Vanguard Schwab ETFs
AUM 48.39B 15.16B
Avg. Return 5.84% 17.81%
Div. Yield 2.33% 0.43%
Expense Ratio 0.05% 0.04%

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 U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

VCIT’s dividend yield is 1.90% higher than that of SCHG (2.33% vs. 0.43%). Also, VCIT yielded on average 11.97% less per year over the past decade (5.84% vs. 17.81%). The expense ratio of VCIT is 0.01 percentage points higher than SCHG’s (0.05% vs. 0.04%).

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.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

Risk Analysis

VCIT SCHG
Mean Return 0.44 1.46
R-squared 63.18 92.92
Std. Deviation 5.08 14.78
Alpha 0.89 1.97
Beta 1.35 1.05
Sharpe Ratio 0.91 1.14
Treynor Ratio 3.43 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Standard Deviation of 14.78 with a Alpha of 1.97 and a R-squared of 92.92. Its Treynor Ratio is 16.3 while SCHG’s Beta is 1.05. Furthermore, the fund has a Mean Return of 1.46 and a Sharpe Ratio of 1.14.

VCIT’s Mean Return is 1.02 points lower than that of SCHG and its R-squared is 29.74 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than SCHG. The Alpha and Beta of VCIT are 1.08 points lower and 0.30 points higher than SCHG’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. SCHG - Annual Returns

Year VCIT SCHG
2020 9.55% 39.13%
2019 13.97% 36.21%
2018 -1.75% -1.35%
2017 5.5% 28.04%
2016 5.3% 6.76%
2015 0.88% 3.26%
2014 7.47% 15.74%
2013 -1.8% 33.96%
2012 11.36% 17.02%
2011 7.94% -0.67%
2010 10.65% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

VCIT vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
SCHG $10,000 $47,556 17.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

VCIT’s CAGR is 11.97 percentage points lower than that of SCHG and as a result, would have yielded $30,117 less on a $10,000 investment. Thus, VCIT performed worse than SCHG by 11.97% annually.


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