VEA vs. SCHD: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VEA and SCHD? And which fund is better?

The expense ratio of VEA is 0.01 percentage points lower than SCHD’s (0.05% vs. 0.06%). VEA also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than SCHD over the past ten years.

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

Summary

VEA SCHD
Name Vanguard FTSE Developed Markets Index Fund ETF Shares Schwab U.S. Dividend Equity ETF
Category Foreign Large Blend Large Value
Issuer Vanguard Schwab ETFs
AUM 157.48B 26B
Avg. Return 7.05% 14.80%
Div. Yield 2.49% 2.89%
Expense Ratio 0.05% 0.06%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% with an expense ratio of 0.05%.

The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

VEA’s dividend yield is 0.40% lower than that of SCHD (2.49% vs. 2.89%). Also, VEA yielded on average 7.75% less per year over the past decade (7.05% vs. 14.80%). The expense ratio of VEA is 0.01 percentage points lower than SCHD’s (0.05% vs. 0.06%).

Fund Composition

Industry Exposure

VEA vs. SCHD - Industry Exposure

VEA SCHD
Technology 11.67% 16.26%
Industrials 15.47% 18.05%
Energy 4.17% 1.87%
Communication Services 5.41% 4.96%
Utilities 3.1% 0.0%
Healthcare 10.6% 12.64%
Consumer Defensive 8.61% 14.04%
Real Estate 4.04% 0.0%
Financial Services 17.39% 21.69%
Consumer Cyclical 11.31% 8.36%
Basic Materials 8.24% 2.13%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.

VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.

The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

VEA is 4.30% less exposed to the Financial Services sector than SCHD (17.39% vs 21.69%). VEA’s exposure to Industrials and Technology stocks is 2.58% lower and 4.59% lower respectively (15.47% vs. 18.05% and 11.67% vs. 16.26%). In total, Real Estate, Energy, and Communication Services also make up 6.79% more of the fund’s holdings compared to SCHD (13.62% vs. 6.83%).

Holdings

VEA - Holdings

VEA Holdings Weight
Nestle SA 1.5%
Samsung Electronics Co Ltd 1.4%
ASML Holding NV 1.16%
Roche Holding AG 1.1%
Toyota Motor Corp 0.92%
LVMH Moet Hennessy Louis Vuitton SE 0.84%
Novartis AG 0.82%
Shopify Inc A 0.7%
AstraZeneca PLC 0.67%
SAP SE 0.66%

VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.

LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

Performance

Annual Returns

VEA vs. SCHD - Annual Returns

Year VEA SCHD
2020 10.29% 15.11%
2019 22.08% 27.28%
2018 -14.47% -5.46%
2017 26.44% 20.88%
2016 2.51% 16.25%
2015 -0.21% -0.21%
2014 -5.71% 11.66%
2013 22.12% 32.9%
2012 18.6% 11.4%
2011 -12.57% 0.0%
2010 8.47% 0.0%

VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% respectively.

The year 2013 was the strongest year for SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.

Portfolio Growth

VEA vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $17,150 7.05%
SCHD $10,000 $28,823 14.80%

A $10,000 investment in VEA would have resulted in a final balance of $17,150. This is a profit of $7,150 over 8 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.

VEA’s CAGR is 7.75 percentage points lower than that of SCHD and as a result, would have yielded $11,673 less on a $10,000 investment. Thus, VEA performed worse than SCHD by 7.75% annually.


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