The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between VCIT and SCHX? And which fund is better?
The expense ratio of VCIT is 0.02 percentage points higher than SCHX’s (0.05% vs. 0.03%). VCIT is mostly comprised of BBB bonds while SCHX has a high exposure to the technology sector. Overall, VCIT has provided lower returns than SCHX over the past ten years.
In this article, we’ll compare VCIT vs. SCHX. We’ll look at fund composition and holdings, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VCIT’s and SCHX’s industry exposure, performance, and annual returns and examine how these affect their overall returns.
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|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||Schwab U.S. Large-Cap ETF|
|Category||Corporate Bond||Large Blend|
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 ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.
VCIT’s dividend yield is 0.92% higher than that of SCHX (2.33% vs. 1.41%). Also, VCIT yielded on average 8.76% less per year over the past decade (5.84% vs. 14.60%). The expense ratio of VCIT is 0.02 percentage points higher than SCHX’s (0.05% vs. 0.03%).
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|VCIT Bond Sectors||Weight|
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.
|Facebook Inc A||2.08%|
|Alphabet Inc A||1.84%|
|Alphabet Inc Class C||1.78%|
|Berkshire Hathaway Inc Class B||1.32%|
|JPMorgan Chase & Co||1.18%|
SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.
Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Treynor Ratio of 3.43 with a Mean Return of 0.44 and a R-squared of 63.18. Its Beta is 1.35 while VCIT’s Standard Deviation is 5.08. Furthermore, the fund has a Sharpe Ratio of 0.91 and a Alpha of 0.89.
The Schwab U.S. Large-Cap ETF (SCHX) has a Beta of 1.02 with a Sharpe Ratio of 1.03 and a R-squared of 99.83. Its Mean Return is 1.24 while SCHX’s Standard Deviation is 13.8. Furthermore, the fund has a Alpha of -0.14 and a Treynor Ratio of 14.06.
VCIT’s Mean Return is 0.80 points lower than that of SCHX and its R-squared is 36.65 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than SCHX. The Alpha and Beta of VCIT are 1.03 points higher and 0.33 points higher than SCHX’s Alpha and Beta.
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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 2013 was the strongest year for SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.
VCIT’s CAGR is 8.76 percentage points lower than that of SCHX and as a result, would have yielded $19,548 less on a $10,000 investment. Thus, VCIT performed worse than SCHX by 8.76% annually.
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