VCSH vs. SCHF: What’s The Difference?

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

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

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

Summary

VCSH SCHF
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Schwab International Equity ETF
Category Short-Term Bond Foreign Large Blend
Issuer Vanguard Schwab ETFs
AUM 47.88B 26.99B
Avg. Return 3.12% 6.43%
Div. Yield 1.89% 2.16%
Expense Ratio 0.05% 0.06%

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 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%.

VCSH’s dividend yield is 0.27% lower than that of SCHF (1.89% vs. 2.16%). Also, VCSH yielded on average 3.31% less per year over the past decade (3.12% vs. 6.43%). The expense ratio of VCSH is 0.01 percentage points lower than SCHF’s (0.05% vs. 0.06%).

Fund Composition

Holdings

VCSH - Holdings

VCSH Bond Sectors Weight
BBB 47.49%
A 43.06%
AA 8.45%
AAA 0.95%
Below B 0.03%
Others 0.02%
B 0.0%
BB 0.0%
US Government 0.0%

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.

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

VCSH SCHF
Mean Return 0.24 0.58
R-squared 37.53 98.16
Std. Deviation 2.34 15.08
Alpha 0.93 0.53
Beta 0.48 0.99
Sharpe Ratio 0.97 0.42
Treynor Ratio 4.75 5.39

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Sharpe Ratio of 0.97 with a R-squared of 37.53 and a Alpha of 0.93. Its Beta is 0.48 while VCSH’s Standard Deviation is 2.34. Furthermore, the fund has a Treynor Ratio of 4.75 and a Mean Return of 0.24.

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

VCSH’s Mean Return is 0.34 points lower than that of SCHF and its R-squared is 60.63 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than SCHF. The Alpha and Beta of VCSH are 0.40 points higher and 0.51 points lower than SCHF’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. SCHF - Annual Returns

Year VCSH SCHF
2020 5.08% 9.86%
2019 6.85% 22.15%
2018 0.91% -14.39%
2017 2.45% 25.83%
2016 2.63% 2.88%
2015 1.25% -2.44%
2014 1.96% -4.44%
2013 1.37% 20.03%
2012 5.74% 17.12%
2011 2.94% -12.32%
2010 5.51% 8.6%

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 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

VCSH vs. SCHF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
SCHF $10,000 $17,089 6.43%

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 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%.

VCSH’s CAGR is 3.31 percentage points lower than that of SCHF and as a result, would have yielded $3,520 less on a $10,000 investment. Thus, VCSH performed worse than SCHF by 3.31% annually.


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