VCSH vs. SCHG: What’s The Difference?

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

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

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

Summary

VCSH SCHG
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Schwab U.S. Large-Cap Growth ETF
Category Short-Term Bond Large Growth
Issuer Vanguard Schwab ETFs
AUM 47.88B 15.16B
Avg. Return 3.12% 17.81%
Div. Yield 1.89% 0.43%
Expense Ratio 0.05% 0.04%

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. 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%.

VCSH’s dividend yield is 1.46% higher than that of SCHG (1.89% vs. 0.43%). Also, VCSH yielded on average 14.69% less per year over the past decade (3.12% vs. 17.81%). The expense ratio of VCSH is 0.01 percentage points higher than SCHG’s (0.05% vs. 0.04%).

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.

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

VCSH SCHG
Mean Return 0.24 1.46
R-squared 37.53 92.92
Std. Deviation 2.34 14.78
Alpha 0.93 1.97
Beta 0.48 1.05
Sharpe Ratio 0.97 1.14
Treynor Ratio 4.75 16.3

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 Beta of 0.48. Its Mean Return is 0.24 while VCSH’s Treynor Ratio is 4.75. Furthermore, the fund has a Standard Deviation of 2.34 and a Alpha of 0.93.

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

VCSH’s Mean Return is 1.22 points lower than that of SCHG and its R-squared is 55.39 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than SCHG. The Alpha and Beta of VCSH are 1.04 points lower and 0.57 points lower than SCHG’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. SCHG - Annual Returns

Year VCSH SCHG
2020 5.08% 39.13%
2019 6.85% 36.21%
2018 0.91% -1.35%
2017 2.45% 28.04%
2016 2.63% 6.76%
2015 1.25% 3.26%
2014 1.96% 15.74%
2013 1.37% 33.96%
2012 5.74% 17.02%
2011 2.94% -0.67%
2010 5.51% 16.83%

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 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

VCSH vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
SCHG $10,000 $47,556 17.81%

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 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%.

VCSH’s CAGR is 14.69 percentage points lower than that of SCHG and as a result, would have yielded $33,987 less on a $10,000 investment. Thus, VCSH performed worse than SCHG by 14.69% annually.


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