The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VCSH and SCHA? And which fund is better?
The expense ratio of VCSH is 0.01 percentage points higher than SCHA’s (0.05% vs. 0.04%). VCSH is mostly comprised of BBB bonds while SCHA has a high exposure to the healthcare sector. Overall, VCSH has provided lower returns than SCHA over the past ten years.
In this article, we’ll compare VCSH vs. SCHA. We’ll look at annual returns and portfolio growth, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VCSH’s and SCHA’s fund composition, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Short-Term Corporate Bond Index Fund ETF Shares||Schwab U.S. Small-Cap ETF|
|Category||Short-Term Bond||Small Blend|
The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) is a Short-Term Bond fund that is issued by Vanguard. It currently has 47.88B total assets under management and has yielded an average annual return of 3.12% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.05%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
VCSH’s dividend yield is 0.91% higher than that of SCHA (1.89% vs. 0.98%). Also, VCSH yielded on average 9.51% less per year over the past decade (3.12% vs. 12.62%). The expense ratio of VCSH is 0.01 percentage points higher than SCHA’s (0.05% vs. 0.04%).
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|VCSH Bond Sectors||Weight|
VCSH’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 47.49%, 43.06%, 8.45%, 0.95%, and 0.03%. The fund is less weighted towards Others (0.02%), B (0.0%), and BB (0.0%) rated bonds.
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|Penn National Gaming Inc||0.27%|
|Axon Enterprise Inc||0.27%|
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
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The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a R-squared of 37.53 with a Sharpe Ratio of 0.97 and a Standard Deviation of 2.34. Its Beta is 0.48 while VCSH’s Treynor Ratio is 4.75. Furthermore, the fund has a Alpha of 0.93 and a Mean Return of 0.24.
The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a R-squared of 82.26 and a Standard Deviation of 18.68. Its Sharpe Ratio is 0.7 while SCHA’s Alpha is -4.65. Furthermore, the fund has a Beta of 1.25 and a Treynor Ratio of 9.62.
VCSH’s Mean Return is 0.90 points lower than that of SCHA and its R-squared is 44.73 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than SCHA. The Alpha and Beta of VCSH are 5.58 points higher and 0.77 points lower than SCHA’s Alpha and Beta.
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VCSH had its best year in 2019 with an annual return of 6.85%. VCSH’s worst year over the past decade yielded 0.91% and occurred in 2018. In most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 2.45%, 2.63%, and 2.94% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VCSH would have resulted in a final balance of $13,569. This is a profit of $3,569 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.12%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
VCSH’s CAGR is 9.51 percentage points lower than that of SCHA and as a result, would have yielded $16,466 less on a $10,000 investment. Thus, VCSH performed worse than SCHA by 9.51% annually.
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