VGK vs. SCHA: What’s The Difference?

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.

Summary

VGK SCHA
Name Vanguard FTSE Europe Index Fund ETF Shares Schwab U.S. Small-Cap ETF
Category Europe Stock Small Blend
Issuer Vanguard Schwab ETFs
AUM 25.7B 16.51B
Avg. Return 6.68% 12.62%
Div. Yield 2.52% 0.98%
Expense Ratio 0.08% 0.04%

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%).

Fund Composition

Industry Exposure

VGK vs. SCHA - Industry Exposure

VGK SCHA
Technology 8.3% 14.91%
Industrials 15.58% 15.37%
Energy 4.3% 3.35%
Communication Services 5.09% 3.5%
Utilities 3.89% 1.83%
Healthcare 13.76% 16.5%
Consumer Defensive 11.39% 3.75%
Real Estate 2.57% 7.83%
Financial Services 15.85% 14.49%
Consumer Cyclical 11.6% 14.48%
Basic Materials 7.67% 3.98%

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%).

Holdings

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

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%.

SCHA - Holdings

SCHA Holdings Weight
AMC Entertainment Holdings Inc Class A 0.67%
Caesars Entertainment Inc 0.51%
Cloudflare Inc 0.48%
NovoCure Ltd 0.45%
Plug Power Inc 0.41%
10x Genomics Inc Ordinary Shares – Class A 0.34%
GameStop Corp Class A 0.28%
RH 0.27%
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%.

Risk Analysis

VGK SCHA
Mean Return 0.61 1.14
R-squared 92.76 82.26
Std. Deviation 16.65 18.68
Alpha 0.45 -4.65
Beta 1.06 1.25
Sharpe Ratio 0.4 0.7
Treynor Ratio 5.12 9.62

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.

Performance

Annual Returns

VGK vs. SCHA - Annual Returns

Year VGK SCHA
2020 6.5% 19.35%
2019 24.26% 26.54%
2018 -14.79% -11.75%
2017 27.06% 15.04%
2016 -0.59% 19.88%
2015 -1.87% -4.24%
2014 -6.56% 6.53%
2013 24.93% 39.59%
2012 21.01% 18.24%
2011 -11.49% -2.95%
2010 5.01% 28.31%

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.

Portfolio Growth

VGK vs. SCHA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGK $10,000 $17,475 6.68%
SCHA $10,000 $30,035 12.62%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply