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VEU vs. SCHD: What’s The Difference?

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

VEUSCHD
NameVanguard FTSE All-World ex-US Index Fund ETF SharesSchwab U.S. Dividend Equity ETF
CategoryForeign Large BlendLarge Value
IssuerVanguardSchwab ETFs
AUM53.64B26B
Avg. Return6.64%14.80%
Div. Yield2.31%2.89%
Expense Ratio0.08%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 vs. SCHD - Industry Exposure

VEUSCHD
Technology12.94%16.26%
Industrials12.19%18.05%
Energy4.69%1.87%
Communication Services7.44%4.96%
Utilities2.89%0.0%
Healthcare9.34%12.64%
Consumer Defensive8.28%14.04%
Real Estate3.04%0.0%
Financial Services18.46%21.69%
Consumer Cyclical12.57%8.36%
Basic Materials8.17%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

VEU HoldingsWeight
Tencent Holdings Ltd1.57%
Alibaba Group Holding Ltd Ordinary Shares1.4%
Nestle SA1.22%
Taiwan Semiconductor Manufacturing Co Ltd0.98%
ASML Holding NV0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR0.91%
Roche Holding AG0.91%
Toyota Motor Corp0.75%
LVMH Moet Hennessy Louis Vuitton SE0.68%
Novartis AG0.67%

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

SCHD HoldingsWeight
Merck & Co Inc4.24%
The Home Depot Inc4.19%
Texas Instruments Inc4.16%
Broadcom Inc4.15%
Amgen Inc4.11%
PepsiCo Inc4.09%
BlackRock Inc4.05%
Pfizer Inc3.97%
Verizon Communications Inc3.96%
Cisco Systems Inc3.96%

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%.

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Risk Analysis

VEUSCHD
Mean Return0.560
R-squared98.440
Std. Deviation15.080
Alpha0.280
Beta0.990
Sharpe Ratio0.40
Treynor Ratio5.120

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

VEU vs. SCHD - Annual Returns

YearVEUSCHD
202011.39%15.11%
201921.63%27.28%
2018-13.97%-5.46%
201727.27%20.88%
20164.77%16.25%
2015-4.67%-0.21%
2014-4.05%11.66%
201314.5%32.9%
201218.55%11.4%
2011-14.25%0.0%
201011.85%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

VEU vs. SCHD - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEU$10,000$16,2776.64%
SCHD$10,000$28,82314.80%

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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