The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VGT and SCHD? And which fund is better?
The expense ratio of VGT is 0.04 percentage points higher than SCHD’s (0.1% vs. 0.06%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than SCHD over the past ten years.
In this article, we’ll compare VGT vs. SCHD. We’ll look at industry exposure and risk metrics, as well as at their holdings and annual returns. Moreover, I’ll also discuss VGT’s and SCHD’s performance, fund composition, and portfolio growth and examine how these affect their overall returns.
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Summary
| VGT | SCHD | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Schwab U.S. Dividend Equity ETF |
| Category | Technology | Large Value |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 54.13B | 26B |
| Avg. Return | 20.84% | 14.80% |
| Div. Yield | 0.66% | 2.89% |
| Expense Ratio | 0.1% | 0.06% |
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. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
VGT’s dividend yield is 2.23% lower than that of SCHD (0.66% vs. 2.89%). Also, VGT yielded on average 6.03% more per year over the past decade (20.84% vs. 14.80%). The expense ratio of VGT is 0.04 percentage points higher than SCHD’s (0.1% vs. 0.06%).
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Fund Composition
Industry Exposure
| VGT | SCHD | |
| Technology | 88.89% | 16.26% |
| Industrials | 1.67% | 18.05% |
| Energy | 0.0% | 1.87% |
| Communication Services | 0.61% | 4.96% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 0.0% | 12.64% |
| Consumer Defensive | 0.0% | 14.04% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 8.83% | 21.69% |
| Consumer Cyclical | 0.0% | 8.36% |
| Basic Materials | 0.0% | 2.13% |
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. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
VGT is 72.63% more exposed to the Technology sector than SCHD (88.89% vs 16.26%). VGT’s exposure to Financial Services and Industrials stocks is 12.86% lower and 16.38% lower respectively (8.83% vs. 21.69% and 1.67% vs. 18.05%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 22.40% less of the fund’s holdings compared to SCHD (0.00% vs. 22.40%).
Holdings
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| 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%.
| SCHD Holdings | Weight |
| Merck & Co Inc | 4.24% |
| The Home Depot Inc | 4.19% |
| Texas Instruments Inc | 4.16% |
| Broadcom Inc | 4.15% |
| Amgen Inc | 4.11% |
| PepsiCo Inc | 4.09% |
| BlackRock Inc | 4.05% |
| Pfizer Inc | 3.97% |
| Verizon Communications Inc | 3.96% |
| Cisco Systems Inc | 3.96% |
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
Risk Analysis
| VGT | SCHD | |
| Mean Return | 1.76 | 0 |
| R-squared | 74.84 | 0 |
| Std. Deviation | 16.61 | 0 |
| Alpha | 10.41 | 0 |
| Beta | 1.02 | 0 |
| Sharpe Ratio | 1.23 | 0 |
| Treynor Ratio | 20.55 | 0 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Sharpe Ratio of 1.23 and a Treynor Ratio of 20.55. Its Beta is 1.02 while VGT’s Alpha is 10.41. Furthermore, the fund has a Standard Deviation of 16.61 and a Mean Return of 1.76.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Mean Return of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while SCHD’s Beta is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.
VGT’s Mean Return is 1.76 points higher than that of SCHD and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than SCHD. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than SCHD’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | SCHD |
| 2020 | 45.94% | 15.11% |
| 2019 | 48.68% | 27.28% |
| 2018 | 2.52% | -5.46% |
| 2017 | 37.07% | 20.88% |
| 2016 | 13.73% | 16.25% |
| 2015 | 5.02% | -0.21% |
| 2014 | 18.01% | 11.66% |
| 2013 | 30.91% | 32.9% |
| 2012 | 14.05% | 11.4% |
| 2011 | 0.52% | 0.0% |
| 2010 | 12.74% | 0.0% |
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 SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $56,262 | 20.84% |
| SCHD | $10,000 | $28,823 | 14.80% |
A $10,000 investment in VGT would have resulted in a final balance of $56,262. This is a profit of $46,262 over 8 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.
VGT’s CAGR is 6.03 percentage points higher than that of SCHD and as a result, would have yielded $27,439 more on a $10,000 investment. Thus, VGT outperformed SCHD by 6.03% annually.
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