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VGT vs. SCHG: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between VGT and SCHG? And which fund is better?

The expense ratio of VGT is 0.06 percentage points higher than SCHG’s (0.1% vs. 0.04%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than SCHG over the past ten years.

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

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Summary

VGTSCHG
NameVanguard Information Technology Index Fund ETF SharesSchwab U.S. Large-Cap Growth ETF
CategoryTechnologyLarge Growth
IssuerVanguardSchwab ETFs
AUM54.13B15.16B
Avg. Return20.84%17.81%
Div. Yield0.66%0.43%
Expense Ratio0.1%0.04%

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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

VGT’s dividend yield is 0.23% higher than that of SCHG (0.66% vs. 0.43%). Also, VGT yielded on average 3.03% more per year over the past decade (20.84% vs. 17.81%). The expense ratio of VGT is 0.06 percentage points higher than SCHG’s (0.1% vs. 0.04%).

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Fund Composition

Industry Exposure

VGT vs. SCHG - Industry Exposure

VGTSCHG
Technology88.89%39.21%
Industrials1.67%3.01%
Energy0.0%0.2%
Communication Services0.61%17.07%
Utilities0.0%0.0%
Healthcare0.0%12.05%
Consumer Defensive0.0%2.15%
Real Estate0.0%1.64%
Financial Services8.83%7.98%
Consumer Cyclical0.0%15.01%
Basic Materials0.0%1.68%

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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

VGT is 49.68% more exposed to the Technology sector than SCHG (88.89% vs 39.21%). VGT’s exposure to Financial Services and Industrials stocks is 0.85% higher and 1.34% lower respectively (8.83% vs. 7.98% and 1.67% vs. 3.01%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 18.80% less of the fund’s holdings compared to SCHG (0.00% vs. 18.80%).

Holdings

VGT - Holdings

VGT HoldingsWeight
Apple Inc19.58%
Microsoft Corp16.53%
NVIDIA Corp4.22%
Visa Inc Class A3.16%
PayPal Holdings Inc2.76%
Mastercard Inc Class A2.76%
Adobe Inc2.39%
Intel Corp1.94%
Salesforce.com Inc1.91%
Cisco Systems Inc1.9%

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%.

SCHG - Holdings

SCHG HoldingsWeight
Apple Inc11.49%
Microsoft Corp10.91%
Amazon.com Inc7.89%
Facebook Inc A4.45%
Alphabet Inc A3.93%
Alphabet Inc Class C3.82%
Tesla Inc2.8%
NVIDIA Corp2.67%
Visa Inc Class A2.12%
UnitedHealth Group Inc2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

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Risk Analysis

VGTSCHG
Mean Return1.761.46
R-squared74.8492.92
Std. Deviation16.6114.78
Alpha10.411.97
Beta1.021.05
Sharpe Ratio1.231.14
Treynor Ratio20.5516.3

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a Beta of 1.02 and a Sharpe Ratio of 1.23. Its Standard Deviation is 16.61 while VGT’s R-squared is 74.84. Furthermore, the fund has a Alpha of 10.41 and a Treynor Ratio of 20.55.

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a R-squared of 92.92 with a Beta of 1.05 and a Alpha of 1.97. Its Mean Return is 1.46 while SCHG’s Standard Deviation is 14.78. Furthermore, the fund has a Treynor Ratio of 16.3 and a Sharpe Ratio of 1.14.

VGT’s Mean Return is 0.30 points higher than that of SCHG and its R-squared is 18.08 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than SCHG. The Alpha and Beta of VGT are 8.44 points higher and 0.03 points lower than SCHG’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. SCHG - Annual Returns

YearVGTSCHG
202045.94%39.13%
201948.68%36.21%
20182.52%-1.35%
201737.07%28.04%
201613.73%6.76%
20155.02%3.26%
201418.01%15.74%
201330.91%33.96%
201214.05%17.02%
20110.52%-0.67%
201012.74%16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

VGT vs. SCHG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$64,50020.84%
SCHG$10,000$47,55617.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

VGT’s CAGR is 3.03 percentage points higher than that of SCHG and as a result, would have yielded $16,944 more on a $10,000 investment. Thus, VGT outperformed SCHG by 3.03% annually.


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