VEU vs. SCHX: What’s The Difference?

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between VEU and SCHX? And which fund is better?

The expense ratio of VEU is 0.05 percentage points higher than SCHX’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 SCHX over the past ten years.

In this article, we’ll compare VEU vs. SCHX. We’ll look at annual returns and holdings, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VEU’s and SCHX’s portfolio growth, performance, and fund composition and examine how these affect their overall returns.

Summary

VEU SCHX
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares Schwab U.S. Large-Cap ETF
Category Foreign Large Blend Large Blend
Issuer Vanguard Schwab ETFs
AUM 53.64B 30.89B
Avg. Return 6.64% 14.60%
Div. Yield 2.31% 1.41%
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. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.

VEU’s dividend yield is 0.90% higher than that of SCHX (2.31% vs. 1.41%). Also, VEU yielded on average 7.96% less per year over the past decade (6.64% vs. 14.60%). The expense ratio of VEU is 0.05 percentage points higher than SCHX’s (0.08% vs. 0.03%).

Fund Composition

Industry Exposure

VEU vs. SCHX - Industry Exposure

VEU SCHX
Technology 12.94% 25.13%
Industrials 12.19% 8.65%
Energy 4.69% 2.72%
Communication Services 7.44% 11.26%
Utilities 2.89% 2.37%
Healthcare 9.34% 13.04%
Consumer Defensive 8.28% 5.97%
Real Estate 3.04% 3.13%
Financial Services 18.46% 13.82%
Consumer Cyclical 12.57% 11.63%
Basic Materials 8.17% 2.28%

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 ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.

SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.

VEU is 4.64% more exposed to the Financial Services sector than SCHX (18.46% vs 13.82%). VEU’s exposure to Technology and Consumer Cyclical stocks is 12.19% lower and 0.94% higher respectively (12.94% vs. 25.13% and 12.57% vs. 11.63%). In total, Real Estate, Energy, and Communication Services also make up 1.94% less of the fund’s holdings compared to SCHX (15.17% vs. 17.11%).

Holdings

VEU - 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%.

SCHX - Holdings

SCHX Holdings Weight
Apple Inc 5.37%
Microsoft Corp 5.1%
Amazon.com Inc 3.69%
Facebook Inc A 2.08%
Alphabet Inc A 1.84%
Alphabet Inc Class C 1.78%
Berkshire Hathaway Inc Class B 1.32%
Tesla Inc 1.31%
NVIDIA Corp 1.25%
JPMorgan Chase & Co 1.18%

SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.

Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.

Risk Analysis

VEU SCHX
Mean Return 0.56 1.24
R-squared 98.44 99.83
Std. Deviation 15.08 13.8
Alpha 0.28 -0.14
Beta 0.99 1.02
Sharpe Ratio 0.4 1.03
Treynor Ratio 5.12 14.06

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 Sharpe Ratio of 0.4. Its Alpha is 0.28 while VEU’s Mean Return is 0.56. Furthermore, the fund has a R-squared of 98.44 and a Standard Deviation of 15.08.

The Schwab U.S. Large-Cap ETF (SCHX) has a Alpha of -0.14 with a Treynor Ratio of 14.06 and a Standard Deviation of 13.8. Its R-squared is 99.83 while SCHX’s Mean Return is 1.24. Furthermore, the fund has a Sharpe Ratio of 1.03 and a Beta of 1.02.

VEU’s Mean Return is 0.68 points lower than that of SCHX and its R-squared is 1.39 points lower. With a Standard Deviation of 15.08, VEU is slightly more volatile than SCHX. The Alpha and Beta of VEU are 0.42 points higher and 0.03 points lower than SCHX’s Alpha and Beta.

Performance

Annual Returns

VEU vs. SCHX - Annual Returns

Year VEU SCHX
2020 11.39% 20.9%
2019 21.63% 31.4%
2018 -13.97% -4.52%
2017 27.27% 21.91%
2016 4.77% 11.78%
2015 -4.67% 1.02%
2014 -4.05% 13.33%
2013 14.5% 32.54%
2012 18.55% 16.06%
2011 -14.25% 1.61%
2010 11.85% 15.88%

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 SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% respectively.

Portfolio Growth

VEU vs. SCHX - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $16,546 6.64%
SCHX $10,000 $36,987 14.60%

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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.

VEU’s CAGR is 7.96 percentage points lower than that of SCHX and as a result, would have yielded $20,441 less on a $10,000 investment. Thus, VEU performed worse than SCHX by 7.96% annually.


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