The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VGT and SCHA? And which fund is better?
The expense ratio of VGT is 0.06 percentage points higher than SCHA’s (0.1% vs. 0.04%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than SCHA over the past ten years.
In this article, we’ll compare VGT vs. SCHA. We’ll look at portfolio growth and performance, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VGT’s and SCHA’s fund composition, holdings, and industry exposure and examine how these affect their overall returns.
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|Name||Vanguard Information Technology Index Fund ETF Shares||Schwab U.S. Small-Cap ETF|
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
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%.
VGT’s dividend yield is 0.32% lower than that of SCHA (0.66% vs. 0.98%). Also, VGT yielded on average 8.21% more per year over the past decade (20.84% vs. 12.62%). The expense ratio of VGT is 0.06 percentage points higher than SCHA’s (0.1% vs. 0.04%).
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
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%.
VGT is 73.98% more exposed to the Technology sector than SCHA (88.89% vs 14.91%). VGT’s exposure to Financial Services and Industrials stocks is 5.66% lower and 13.70% lower respectively (8.83% vs. 14.49% and 1.67% vs. 15.37%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 26.06% less of the fund’s holdings compared to SCHA (0.00% vs. 26.06%).
|Visa Inc Class A||3.16%|
|PayPal Holdings Inc||2.76%|
|Mastercard Inc Class A||2.76%|
|Cisco Systems Inc||1.9%|
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
|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 Information Technology Index Fund ETF Shares (VGT) has a Standard Deviation of 16.61 with a Beta of 1.02 and a Alpha of 10.41. Its Mean Return is 1.76 while VGT’s R-squared is 74.84. Furthermore, the fund has a Sharpe Ratio of 1.23 and a Treynor Ratio of 20.55.
The Schwab U.S. Small-Cap ETF (SCHA) has a Alpha of -4.65 with a Mean Return of 1.14 and a Sharpe Ratio of 0.7. Its Standard Deviation is 18.68 while SCHA’s Beta is 1.25. Furthermore, the fund has a R-squared of 82.26 and a Treynor Ratio of 9.62.
VGT’s Mean Return is 0.62 points higher than that of SCHA and its R-squared is 7.42 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than SCHA. The Alpha and Beta of VGT are 15.06 points higher and 0.23 points lower than SCHA’s Alpha and Beta.
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VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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 VGT would have resulted in a final balance of $64,500. This is a profit of $54,500 over 10 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
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%.
VGT’s CAGR is 8.21 percentage points higher than that of SCHA and as a result, would have yielded $34,465 more on a $10,000 investment. Thus, VGT outperformed SCHA by 8.21% annually.
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