The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VGT and SCHP? And which fund is better?
The expense ratio of VGT is 0.05 percentage points higher than SCHP’s (0.1% vs. 0.05%). VGT also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, VGT has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare VGT vs. SCHP. We’ll look at annual returns and portfolio growth, as well as at their risk metrics and performance. Moreover, I’ll also discuss VGT’s and SCHP’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Information Technology Index Fund ETF Shares||Schwab U.S. TIPS 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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
VGT’s dividend yield is 1.31% lower than that of SCHP (0.66% vs. 1.97%). Also, VGT yielded on average 16.92% more per year over the past decade (20.84% vs. 3.92%). The expense ratio of VGT is 0.05 percentage points higher than SCHP’s (0.1% vs. 0.05%).
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|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%.
|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Beta of 1.02 with a Standard Deviation of 16.61 and a Treynor Ratio of 20.55. Its Mean Return is 1.76 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a R-squared of 74.84 and a Alpha of 10.41.
The Schwab U.S. TIPS ETF (SCHP) has a Alpha of -0.5 with a Standard Deviation of 4.32 and a Mean Return of 0.28. Its R-squared is 66.16 while SCHP’s Sharpe Ratio is 0.64. Furthermore, the fund has a Beta of 1.17 and a Treynor Ratio of 2.31.
VGT’s Mean Return is 1.48 points higher than that of SCHP and its R-squared is 8.68 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than SCHP. The Alpha and Beta of VGT are 10.91 points higher and 0.15 points lower than SCHP’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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% 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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
VGT’s CAGR is 16.92 percentage points higher than that of SCHP and as a result, would have yielded $50,082 more on a $10,000 investment. Thus, VGT outperformed SCHP by 16.92% annually.
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