The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between VEU and SCHG? And which fund is better?
The expense ratio of VEU is 0.04 percentage points higher than SCHG’s (0.08% vs. 0.04%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than SCHG over the past ten years.
In this article, we’ll compare VEU vs. SCHG. We’ll look at annual returns and holdings, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VEU’s and SCHG’s industry exposure, risk metrics, and fund composition and examine how these affect their overall returns.
Summary
| VEU | SCHG | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Schwab U.S. Large-Cap Growth ETF |
| Category | Foreign Large Blend | Large Growth |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 53.64B | 15.16B |
| Avg. Return | 6.64% | 17.81% |
| Div. Yield | 2.31% | 0.43% |
| 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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
VEU’s dividend yield is 1.88% higher than that of SCHG (2.31% vs. 0.43%). Also, VEU yielded on average 11.17% less per year over the past decade (6.64% vs. 17.81%). The expense ratio of VEU is 0.04 percentage points higher than SCHG’s (0.08% vs. 0.04%).
Fund Composition
Industry Exposure
| VEU | SCHG | |
| Technology | 12.94% | 39.21% |
| Industrials | 12.19% | 3.01% |
| Energy | 4.69% | 0.2% |
| Communication Services | 7.44% | 17.07% |
| Utilities | 2.89% | 0.0% |
| Healthcare | 9.34% | 12.05% |
| Consumer Defensive | 8.28% | 2.15% |
| Real Estate | 3.04% | 1.64% |
| Financial Services | 18.46% | 7.98% |
| Consumer Cyclical | 12.57% | 15.01% |
| Basic Materials | 8.17% | 1.68% |
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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
VEU is 10.48% more exposed to the Financial Services sector than SCHG (18.46% vs 7.98%). VEU’s exposure to Technology and Consumer Cyclical stocks is 26.27% lower and 2.44% lower respectively (12.94% vs. 39.21% and 12.57% vs. 15.01%). In total, Real Estate, Energy, and Communication Services also make up 3.74% less of the fund’s holdings compared to SCHG (15.17% vs. 18.91%).
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%.
| SCHG Holdings | Weight |
| Apple Inc | 11.49% |
| Microsoft Corp | 10.91% |
| Amazon.com Inc | 7.89% |
| Facebook Inc A | 4.45% |
| Alphabet Inc A | 3.93% |
| Alphabet Inc Class C | 3.82% |
| Tesla Inc | 2.8% |
| NVIDIA Corp | 2.67% |
| Visa Inc Class A | 2.12% |
| UnitedHealth Group Inc | 2.02% |
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
Risk Analysis
| VEU | SCHG | |
| Mean Return | 0.56 | 1.46 |
| R-squared | 98.44 | 92.92 |
| Std. Deviation | 15.08 | 14.78 |
| Alpha | 0.28 | 1.97 |
| Beta | 0.99 | 1.05 |
| Sharpe Ratio | 0.4 | 1.14 |
| Treynor Ratio | 5.12 | 16.3 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Sharpe Ratio of 0.4 with a Alpha of 0.28 and a Standard Deviation of 15.08. Its R-squared is 98.44 while VEU’s Mean Return is 0.56. Furthermore, the fund has a Beta of 0.99 and a Treynor Ratio of 5.12.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Sharpe Ratio of 1.14 with a R-squared of 92.92 and a Beta of 1.05. Its Treynor Ratio is 16.3 while SCHG’s Alpha is 1.97. Furthermore, the fund has a Mean Return of 1.46 and a Standard Deviation of 14.78.
VEU’s Mean Return is 0.90 points lower than that of SCHG and its R-squared is 5.52 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than SCHG. The Alpha and Beta of VEU are 1.69 points lower and 0.06 points lower than SCHG’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | SCHG |
| 2020 | 11.39% | 39.13% |
| 2019 | 21.63% | 36.21% |
| 2018 | -13.97% | -1.35% |
| 2017 | 27.27% | 28.04% |
| 2016 | 4.77% | 6.76% |
| 2015 | -4.67% | 3.26% |
| 2014 | -4.05% | 15.74% |
| 2013 | 14.5% | 33.96% |
| 2012 | 18.55% | 17.02% |
| 2011 | -14.25% | -0.67% |
| 2010 | 11.85% | 16.83% |
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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $16,546 | 6.64% |
| SCHG | $10,000 | $47,556 | 17.81% |
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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
VEU’s CAGR is 11.17 percentage points lower than that of SCHG and as a result, would have yielded $31,010 less on a $10,000 investment. Thus, VEU performed worse than SCHG by 11.17% annually.
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