The Vanguard FTSE Europe Index Fund ETF Shares (VGK) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VGK is a Vanguard Europe Stock fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VGK and SCHA? And which fund is better?
The expense ratio of VGK is 0.04 percentage points higher than SCHA’s (0.08% vs. 0.04%). VGK also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VGK has provided lower returns than SCHA over the past 10 years.
In this article, we’ll compare VGK vs. SCHA. We’ll look at annual returns and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss VGK’s and SCHA’s industry exposure, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard FTSE Europe Index Fund ETF Shares||Schwab U.S. Small-Cap ETF|
|Category||Europe Stock||Small Blend|
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
VGK’s dividend yield is 1.54% higher than that of SCHA (2.52% vs. 0.98%). Also, VGK yielded on average 5.94% less per year over the past decade (6.68% vs. 12.62%). The expense ratio of VGK is 0.04 percentage points higher than SCHA’s (0.08% vs. 0.04%).
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.
VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.
The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
VGK is 1.36% more exposed to the Financial Services sector than SCHA (15.85% vs 14.49%). VGK’s exposure to Industrials and Healthcare stocks is 0.21% higher and 2.74% lower respectively (15.58% vs. 15.37% and 13.76% vs. 16.5%). In total, Utilities, Energy, and Communication Services also make up 4.60% more of the fund’s holdings compared to SCHA (13.28% vs. 8.68%).
|ASML Holding NV||2.2%|
|Roche Holding AG||2.13%|
|LVMH Moet Hennessy Louis Vuitton SE||1.58%|
|Novo Nordisk A/S B||1.09%|
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|Penn National Gaming Inc||0.27%|
|Axon Enterprise Inc||0.27%|
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Alpha of 0.45 with a R-squared of 92.76 and a Beta of 1.06. Its Sharpe Ratio is 0.4 while VGK’s Standard Deviation is 16.65. Furthermore, the fund has a Treynor Ratio of 5.12 and a Mean Return of 0.61.
The Schwab U.S. Small-Cap ETF (SCHA) has a Treynor Ratio of 9.62 with a Alpha of -4.65 and a Sharpe Ratio of 0.7. Its Standard Deviation is 18.68 while SCHA’s R-squared is 82.26. Furthermore, the fund has a Mean Return of 1.14 and a Beta of 1.25.
VGK’s Mean Return is 0.53 points lower than that of SCHA and its R-squared is 10.50 points higher. With a Standard Deviation of 16.65, VGK is slightly less volatile than SCHA. The Alpha and Beta of VGK are 5.10 points higher and 0.19 points lower than SCHA’s Alpha and Beta.
VGK had its best year in 2017 with an annual return of 27.06%. VGK’s worst year over the past decade yielded -14.79% and occurred in 2018. In most years the Vanguard FTSE Europe Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to -0.59%, 5.01%, and 6.5% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VGK would have resulted in a final balance of $17,475. This is a profit of $7,475 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.68%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
VGK’s CAGR is 5.94 percentage points lower than that of SCHA and as a result, would have yielded $12,560 less on a $10,000 investment. Thus, VGK performed worse than SCHA by 5.94% annually.
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