Investing in ETFs can be a daunting task, especially when trying to choose between similar options such as VEA and SCHF.
Without a clear understanding of the differences between these funds, investors may struggle to make an informed investment decision that aligns with their investment strategy. In this article, we will explore the differences between VEA vs SCHF to help investors make an informed investment decision.
Both funds are foreign large blend funds that provide exposure to developed markets outside of the United States, but there are differences in their holdings, performance, and expense ratios. By comparing the two, investors can gain a better understanding of which one may be a better fit for their investment strategy. Don’t let the complexity of investing in ETFs hold you back. Let’s dive in and see what sets VEA and SCHF apart from each other.
VEA vs SCHF: Overview
What is VEA?
VEA is an ETF that tracks the performance of the FTSE Developed All Cap ex US Index. This index includes large, mid, and small-cap stocks from developed countries outside of the US. VEA is managed by Vanguard and has been in existence since July 2007.
What is SCHF?
SCHF is an ETF that tracks the performance of the FTSE Developed ex US Index. This index includes large and mid-cap stocks from developed countries outside of the US. SCHF is managed by Schwab and has been in existence since November 2009.
Comparison of VEA vs SCHF
VEA and SCHF are both ETFs that track the performance of developed countries outside of the US. However, there are some differences between the two.
One of the key differences is the expense ratio. VEA has a lower expense ratio of 0.05% compared to SCHF’s expense ratio of 0.06%. This means that VEA is slightly cheaper to invest in than SCHF.
Another difference is the holdings of the two ETFs. VEA has a higher exposure to the consumer goods and healthcare sectors, while SCHF has a higher exposure to the financial services sector. Additionally, VEA has a higher standard deviation than SCHF, which means that it has higher volatility.
In terms of returns, VEA has provided higher returns than SCHF over the past ten years. However, past performance is not a guarantee of future results.
Overall, both VEA and SCHF are good options for investors looking to invest in developed countries outside of the US. The choice between the two will depend on an investor’s individual investment goals and preferences.
Performance Comparison VEA vs SCHF
When it comes to comparing VEA and SCHF, performance is a key factor to consider. In this section, we will compare the performance of both ETFs in various aspects.
Year-to-Date Returns VEA vs SCHF
As of the current date, VEA has a year-to-date return of 12.5%, while SCHF has a year-to-date return of 11.8%. This means that VEA has outperformed SCHF by 0.7% in terms of year-to-date returns.
Annualized Return VEA vs SCHF
Over the past ten years, VEA has provided higher annualized returns than SCHF, with VEA having an annualized return of 7.43% and SCHF having an annualized return of 6.92%.
Dividend Comparison VEA vs SCHF
VEA has a higher dividend yield than SCHF, with VEA having a dividend yield of 2.98% and SCHF having a dividend yield of 2.52%.
Expense Ratio Comparison VEA vs SCHF
SCHF has a lower expense ratio than VEA, with SCHF having an expense ratio of 0.06% and VEA having an expense ratio of 0.07%.
Risk-Adjusted Performance Comparison VEA vs SCHF
When it comes to risk-adjusted performance, SCHF has a higher Sharpe ratio than VEA, with SCHF having a Sharpe ratio of 0.14 and VEA having a Sharpe ratio of 0.11.
Drawdown Comparison VEA vs SCHF
VEA has had a lower maximum drawdown than SCHF over the past ten years, with VEA having a maximum drawdown of -22.91% and SCHF having a maximum drawdown of -23.78%.
Volatility Comparison VEA vs SCHF
Both VEA and SCHF have similar levels of price fluctuations, with SCHF having a volatility of 2.58% and VEA having a volatility of 2.71%.
Overall, when comparing the performance of VEA and SCHF, it is important to consider all of the above factors to make an informed decision.
Portfolio Comparison VEA vs SCHF
Holdings SCHF vs VEA
When comparing VEA and SCHF, we can see that both ETFs have a similar number of holdings, with VEA having 4,011 and SCHF having 1,347. However, VEA has a higher percentage of holdings in the financial sector, while SCHF has a higher percentage in the industrial sector.
In terms of the top holdings, both ETFs have similar companies, such as Nestle, Samsung, and Toyota. However, VEA has a higher percentage of holdings in Japan, while SCHF has a higher percentage in the United Kingdom.
Category SCHF vs VEA
VEA and SCHF both fall under the category of developed markets. However, VEA covers a broader range of countries, including Japan and Canada, while SCHF focuses more on Europe and the United Kingdom.
Portfolio Growth SCHF vs VEA
When looking at the portfolio growth of VEA and SCHF, we can see that both have had similar returns over the past 10 years. However, VEA has yielded on average 0.62% more per year over the past decade (7.05% vs. 6.43%).
In terms of volatility, VEA has a higher volatility of 3.49% compared to SCHF at 3.32%. This indicates that VEA’s price experiences larger fluctuations and is considered to be riskier than SCHF based on this measure.
Overall, when comparing VEA and SCHF, we can see that they have some differences in terms of holdings, category, and portfolio growth. However, both ETFs are good options for investors looking to invest in developed markets.
Recommendation and Action
Buy or Sell? SCHF vs VEA
After comparing VEA and SCHF, both ETFs to diversify your portfolio greatly. VEA has lower exposure to the financial services sector, which makes it a good option for those who are looking to avoid financial stocks. On the other hand, SCHF has a higher exposure to the financial sector, which could be beneficial for investors who want to take advantage of the sector’s growth potential.
Both ETFs have provided higher returns than the S&P 500 over the past ten years. Therefore, investing in both ETFs could be a good option for long-term investors who are looking for steady returns.
Liability
Investing in ETFs comes with certain risks, including market risk and liquidity risk. Therefore, we recommend that investors carefully consider their investment objectives, risk tolerance, and financial situation before investing in VEA or SCHF.
It is also important to note that ETFs are not insured by the FDIC or any other government agency. Therefore, investors should be aware of the risks associated with investing in ETFs and should consider consulting a financial advisor before making any investment decisions.
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