The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between VEU and SCHB? And which fund is better?
The expense ratio of VEU is 0.05 percentage points higher than SCHB’s (0.08% vs. 0.03%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare VEU vs. SCHB. We’ll look at holdings and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VEU’s and SCHB’s performance, industry exposure, and portfolio growth and examine how these affect their overall returns.
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Summary
| VEU | SCHB | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Schwab U.S. Broad Market ETF |
| Category | Foreign Large Blend | Large Blend |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 53.64B | 21.44B |
| Avg. Return | 6.64% | 14.43% |
| Div. Yield | 2.31% | 1.39% |
| Expense Ratio | 0.08% | 0.03% |
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. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
VEU’s dividend yield is 0.92% higher than that of SCHB (2.31% vs. 1.39%). Also, VEU yielded on average 7.79% less per year over the past decade (6.64% vs. 14.43%). The expense ratio of VEU is 0.05 percentage points higher than SCHB’s (0.08% vs. 0.03%).
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Fund Composition
Industry Exposure
| VEU | SCHB | |
| Technology | 12.94% | 24.15% |
| Industrials | 12.19% | 9.29% |
| Energy | 4.69% | 2.78% |
| Communication Services | 7.44% | 10.52% |
| Utilities | 2.89% | 2.32% |
| Healthcare | 9.34% | 13.37% |
| Consumer Defensive | 8.28% | 5.76% |
| Real Estate | 3.04% | 3.58% |
| Financial Services | 18.46% | 13.88% |
| Consumer Cyclical | 12.57% | 11.9% |
| Basic Materials | 8.17% | 2.45% |
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. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.
SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.
VEU is 4.58% more exposed to the Financial Services sector than SCHB (18.46% vs 13.88%). VEU’s exposure to Technology and Consumer Cyclical stocks is 11.21% lower and 0.67% higher respectively (12.94% vs. 24.15% and 12.57% vs. 11.9%). In total, Real Estate, Energy, and Communication Services also make up 1.71% less of the fund’s holdings compared to SCHB (15.17% vs. 16.88%).
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%.
| SCHB Holdings | Weight |
| Apple Inc | 4.86% |
| Microsoft Corp | 4.61% |
| Amazon.com Inc | 3.33% |
| Facebook Inc A | 1.88% |
| Alphabet Inc A | 1.66% |
| Alphabet Inc Class C | 1.61% |
| Berkshire Hathaway Inc Class B | 1.19% |
| Tesla Inc | 1.18% |
| NVIDIA Corp | 1.13% |
| JPMorgan Chase & Co | 1.06% |
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
Risk Analysis
| VEU | SCHB | |
| Mean Return | 0.56 | 1.23 |
| R-squared | 98.44 | 99.33 |
| Std. Deviation | 15.08 | 14.12 |
| Alpha | 0.28 | -0.58 |
| Beta | 0.99 | 1.04 |
| Sharpe Ratio | 0.4 | 1 |
| Treynor Ratio | 5.12 | 13.58 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Treynor Ratio of 5.12 with a Beta of 0.99 and a Standard Deviation of 15.08. Its Mean Return is 0.56 while VEU’s Alpha is 0.28. Furthermore, the fund has a R-squared of 98.44 and a Sharpe Ratio of 0.4.
The Schwab U.S. Broad Market ETF (SCHB) has a Treynor Ratio of 13.58 with a Alpha of -0.58 and a R-squared of 99.33. Its Sharpe Ratio is 1 while SCHB’s Beta is 1.04. Furthermore, the fund has a Mean Return of 1.23 and a Standard Deviation of 14.12.
VEU’s Mean Return is 0.67 points lower than that of SCHB and its R-squared is 0.89 points lower. With a Standard Deviation of 15.08, VEU is slightly more volatile than SCHB. The Alpha and Beta of VEU are 0.86 points higher and 0.05 points lower than SCHB’s Alpha and Beta.
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Performance
Annual Returns
| Year | VEU | SCHB |
| 2020 | 11.39% | 20.77% |
| 2019 | 21.63% | 30.94% |
| 2018 | -13.97% | -5.25% |
| 2017 | 27.27% | 21.18% |
| 2016 | 4.77% | 12.56% |
| 2015 | -4.67% | 0.45% |
| 2014 | -4.05% | 12.67% |
| 2013 | 14.5% | 33.37% |
| 2012 | 18.55% | 16.22% |
| 2011 | -14.25% | 1.4% |
| 2010 | 11.85% | 17.1% |
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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $16,546 | 6.64% |
| SCHB | $10,000 | $36,354 | 14.43% |
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 SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.
VEU’s CAGR is 7.79 percentage points lower than that of SCHB and as a result, would have yielded $19,808 less on a $10,000 investment. Thus, VEU performed worse than SCHB by 7.79% annually.
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