The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VEU and SCHD? And which fund is better?
The expense ratio of VEU is 0.02 percentage points higher than SCHD’s (0.08% vs. 0.06%). VEU also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare VEU vs. SCHD. We’ll look at risk metrics and performance, as well as at their annual returns and holdings. Moreover, I’ll also discuss VEU’s and SCHD’s fund composition, industry exposure, and portfolio growth and examine how these affect their overall returns.
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Summary
| VEU | SCHD | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Schwab U.S. Dividend Equity ETF |
| Category | Foreign Large Blend | Large Value |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 53.64B | 26B |
| Avg. Return | 6.64% | 14.80% |
| Div. Yield | 2.31% | 2.89% |
| Expense Ratio | 0.08% | 0.06% |
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. 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%.
VEU’s dividend yield is 0.58% lower than that of SCHD (2.31% vs. 2.89%). Also, VEU yielded on average 8.16% less per year over the past decade (6.64% vs. 14.80%). The expense ratio of VEU is 0.02 percentage points higher than SCHD’s (0.08% vs. 0.06%).
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Fund Composition
Industry Exposure
| VEU | SCHD | |
| Technology | 12.94% | 16.26% |
| Industrials | 12.19% | 18.05% |
| Energy | 4.69% | 1.87% |
| Communication Services | 7.44% | 4.96% |
| Utilities | 2.89% | 0.0% |
| Healthcare | 9.34% | 12.64% |
| Consumer Defensive | 8.28% | 14.04% |
| Real Estate | 3.04% | 0.0% |
| Financial Services | 18.46% | 21.69% |
| Consumer Cyclical | 12.57% | 8.36% |
| Basic Materials | 8.17% | 2.13% |
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. 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%.
VEU is 3.23% less exposed to the Financial Services sector than SCHD (18.46% vs 21.69%). VEU’s exposure to Technology and Consumer Cyclical stocks is 3.32% lower and 4.21% higher respectively (12.94% vs. 16.26% and 12.57% vs. 8.36%). In total, Real Estate, Energy, and Communication Services also make up 8.34% more of the fund’s holdings compared to SCHD (15.17% vs. 6.83%).
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%.
| 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%.
Risk Analysis
| VEU | SCHD | |
| Mean Return | 0.56 | 0 |
| R-squared | 98.44 | 0 |
| Std. Deviation | 15.08 | 0 |
| Alpha | 0.28 | 0 |
| Beta | 0.99 | 0 |
| Sharpe Ratio | 0.4 | 0 |
| Treynor Ratio | 5.12 | 0 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Standard Deviation of 15.08 with a Treynor Ratio of 5.12 and a Sharpe Ratio of 0.4. Its Alpha is 0.28 while VEU’s R-squared is 98.44. Furthermore, the fund has a Beta of 0.99 and a Mean Return of 0.56.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Standard Deviation of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while SCHD’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
VEU’s Mean Return is 0.56 points higher than that of SCHD and its R-squared is 98.44 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than SCHD. The Alpha and Beta of VEU are 0.28 points higher and 0.99 points higher than SCHD’s Alpha and Beta.
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Performance
Annual Returns
| Year | VEU | SCHD |
| 2020 | 11.39% | 15.11% |
| 2019 | 21.63% | 27.28% |
| 2018 | -13.97% | -5.46% |
| 2017 | 27.27% | 20.88% |
| 2016 | 4.77% | 16.25% |
| 2015 | -4.67% | -0.21% |
| 2014 | -4.05% | 11.66% |
| 2013 | 14.5% | 32.9% |
| 2012 | 18.55% | 11.4% |
| 2011 | -14.25% | 0.0% |
| 2010 | 11.85% | 0.0% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $16,277 | 6.64% |
| SCHD | $10,000 | $28,823 | 14.80% |
A $10,000 investment in VEU would have resulted in a final balance of $16,277. This is a profit of $6,277 over 8 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
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%.
VEU’s CAGR is 8.16 percentage points lower than that of SCHD and as a result, would have yielded $12,546 less on a $10,000 investment. Thus, VEU performed worse than SCHD by 8.16% annually.
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