VCSH vs. SCHX: What’s The Difference?

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

The expense ratio of VCSH is 0.02 percentage points higher than SCHX’s (0.05% vs. 0.03%). VCSH is mostly comprised of BBB bonds while SCHX has a high exposure to the technology sector. Overall, VCSH has provided lower returns than SCHX over the past ten years.

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

Summary

VCSH SCHX
Name Vanguard Short-Term Corporate Bond Index Fund ETF Shares Schwab U.S. Large-Cap ETF
Category Short-Term Bond Large Blend
Issuer Vanguard Schwab ETFs
AUM 47.88B 30.89B
Avg. Return 3.12% 14.60%
Div. Yield 1.89% 1.41%
Expense Ratio 0.05% 0.03%

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 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%.

VCSH’s dividend yield is 0.48% higher than that of SCHX (1.89% vs. 1.41%). Also, VCSH yielded on average 11.48% less per year over the past decade (3.12% vs. 14.60%). The expense ratio of VCSH is 0.02 percentage points higher than SCHX’s (0.05% vs. 0.03%).

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.

SCHX - Holdings

SCHX Holdings Weight
Apple Inc 5.37%
Microsoft Corp 5.1%
Amazon.com Inc 3.69%
Facebook Inc A 2.08%
Alphabet Inc A 1.84%
Alphabet Inc Class C 1.78%
Berkshire Hathaway Inc Class B 1.32%
Tesla Inc 1.31%
NVIDIA Corp 1.25%
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%.

Risk Analysis

VCSH SCHX
Mean Return 0.24 1.24
R-squared 37.53 99.83
Std. Deviation 2.34 13.8
Alpha 0.93 -0.14
Beta 0.48 1.02
Sharpe Ratio 0.97 1.03
Treynor Ratio 4.75 14.06

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

The Schwab U.S. Large-Cap ETF (SCHX) has a Mean Return of 1.24 with a Standard Deviation of 13.8 and a Sharpe Ratio of 1.03. Its Treynor Ratio is 14.06 while SCHX’s Alpha is -0.14. Furthermore, the fund has a Beta of 1.02 and a R-squared of 99.83.

VCSH’s Mean Return is 1.00 points lower than that of SCHX and its R-squared is 62.30 points lower. With a Standard Deviation of 2.34, VCSH is slightly less volatile than SCHX. The Alpha and Beta of VCSH are 1.07 points higher and 0.54 points lower than SCHX’s Alpha and Beta.

Performance

Annual Returns

VCSH vs. SCHX - Annual Returns

Year VCSH SCHX
2020 5.08% 20.9%
2019 6.85% 31.4%
2018 0.91% -4.52%
2017 2.45% 21.91%
2016 2.63% 11.78%
2015 1.25% 1.02%
2014 1.96% 13.33%
2013 1.37% 32.54%
2012 5.74% 16.06%
2011 2.94% 1.61%
2010 5.51% 15.88%

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 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.

Portfolio Growth

VCSH vs. SCHX - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCSH $10,000 $13,569 3.12%
SCHX $10,000 $36,987 14.60%

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 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%.

VCSH’s CAGR is 11.48 percentage points lower than that of SCHX and as a result, would have yielded $23,418 less on a $10,000 investment. Thus, VCSH performed worse than SCHX by 11.48% annually.


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