The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VEU and SCHA? And which fund is better?
The expense ratio of VEU is 0.04 percentage points higher than SCHA’s (0.08% vs. 0.04%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than SCHA over the past ten years.
In this article, we’ll compare VEU vs. SCHA. We’ll look at annual returns and performance, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VEU’s and SCHA’s holdings, portfolio growth, and risk metrics and examine how these affect their overall returns.
Summary
| VEU | SCHA | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Schwab U.S. Small-Cap ETF |
| Category | Foreign Large Blend | Small Blend |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 53.64B | 16.51B |
| Avg. Return | 6.64% | 12.62% |
| Div. Yield | 2.31% | 0.98% |
| Expense Ratio | 0.08% | 0.04% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
VEU’s dividend yield is 1.33% higher than that of SCHA (2.31% vs. 0.98%). Also, VEU yielded on average 5.98% less per year over the past decade (6.64% vs. 12.62%). The expense ratio of VEU is 0.04 percentage points higher than SCHA’s (0.08% vs. 0.04%).
Fund Composition
Industry Exposure
| VEU | SCHA | |
| Technology | 12.94% | 14.91% |
| Industrials | 12.19% | 15.37% |
| Energy | 4.69% | 3.35% |
| Communication Services | 7.44% | 3.5% |
| Utilities | 2.89% | 1.83% |
| Healthcare | 9.34% | 16.5% |
| Consumer Defensive | 8.28% | 3.75% |
| Real Estate | 3.04% | 7.83% |
| Financial Services | 18.46% | 14.49% |
| Consumer Cyclical | 12.57% | 14.48% |
| Basic Materials | 8.17% | 3.98% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
VEU is 3.97% more exposed to the Financial Services sector than SCHA (18.46% vs 14.49%). VEU’s exposure to Technology and Consumer Cyclical stocks is 1.97% lower and 1.91% lower respectively (12.94% vs. 14.91% and 12.57% vs. 14.48%). In total, Real Estate, Energy, and Communication Services also make up 0.49% more of the fund’s holdings compared to SCHA (15.17% vs. 14.68%).
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| SCHA Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 0.67% |
| Caesars Entertainment Inc | 0.51% |
| Cloudflare Inc | 0.48% |
| NovoCure Ltd | 0.45% |
| Plug Power Inc | 0.41% |
| 10x Genomics Inc Ordinary Shares – Class A | 0.34% |
| GameStop Corp Class A | 0.28% |
| RH | 0.27% |
| Penn National Gaming Inc | 0.27% |
| Axon Enterprise Inc | 0.27% |
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
Risk Analysis
| VEU | SCHA | |
| Mean Return | 0.56 | 1.14 |
| R-squared | 98.44 | 82.26 |
| Std. Deviation | 15.08 | 18.68 |
| Alpha | 0.28 | -4.65 |
| Beta | 0.99 | 1.25 |
| Sharpe Ratio | 0.4 | 0.7 |
| Treynor Ratio | 5.12 | 9.62 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Alpha of 0.28 with a Treynor Ratio of 5.12 and a Beta of 0.99. Its Sharpe Ratio is 0.4 while VEU’s R-squared is 98.44. Furthermore, the fund has a Standard Deviation of 15.08 and a Mean Return of 0.56.
The Schwab U.S. Small-Cap ETF (SCHA) has a Beta of 1.25 with a Mean Return of 1.14 and a Alpha of -4.65. Its Treynor Ratio is 9.62 while SCHA’s R-squared is 82.26. Furthermore, the fund has a Standard Deviation of 18.68 and a Sharpe Ratio of 0.7.
VEU’s Mean Return is 0.58 points lower than that of SCHA and its R-squared is 16.18 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than SCHA. The Alpha and Beta of VEU are 4.93 points higher and 0.26 points lower than SCHA’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | SCHA |
| 2020 | 11.39% | 19.35% |
| 2019 | 21.63% | 26.54% |
| 2018 | -13.97% | -11.75% |
| 2017 | 27.27% | 15.04% |
| 2016 | 4.77% | 19.88% |
| 2015 | -4.67% | -4.24% |
| 2014 | -4.05% | 6.53% |
| 2013 | 14.5% | 39.59% |
| 2012 | 18.55% | 18.24% |
| 2011 | -14.25% | -2.95% |
| 2010 | 11.85% | 28.31% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $16,546 | 6.64% |
| SCHA | $10,000 | $30,035 | 12.62% |
A $10,000 investment in VEU would have resulted in a final balance of $16,546. This is a profit of $6,546 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
VEU’s CAGR is 5.98 percentage points lower than that of SCHA and as a result, would have yielded $13,489 less on a $10,000 investment. Thus, VEU performed worse than SCHA by 5.98% annually.
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