The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between VGT and SCHX? And which fund is better?
The expense ratio of VGT is 0.07 percentage points higher than SCHX’s (0.1% vs. 0.03%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than SCHX over the past ten years.
In this article, we’ll compare VGT vs. SCHX. We’ll look at fund composition and industry exposure, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VGT’s and SCHX’s performance, annual returns, and holdings and examine how these affect their overall returns.
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|Name||Vanguard Information Technology Index Fund ETF Shares||Schwab U.S. Large-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. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.
VGT’s dividend yield is 0.75% lower than that of SCHX (0.66% vs. 1.41%). Also, VGT yielded on average 6.23% more per year over the past decade (20.84% vs. 14.60%). The expense ratio of VGT is 0.07 percentage points higher than SCHX’s (0.1% vs. 0.03%).
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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. Large-Cap ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.
SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.
VGT is 63.76% more exposed to the Technology sector than SCHX (88.89% vs 25.13%). VGT’s exposure to Financial Services and Industrials stocks is 4.99% lower and 6.98% lower respectively (8.83% vs. 13.82% and 1.67% vs. 8.65%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.73% less of the fund’s holdings compared to SCHX (0.00% vs. 20.73%).
|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%.
|Facebook Inc A||2.08%|
|Alphabet Inc A||1.84%|
|Alphabet Inc Class C||1.78%|
|Berkshire Hathaway Inc Class B||1.32%|
|JPMorgan Chase & Co||1.18%|
SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.
Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Standard Deviation of 16.61 and a Treynor Ratio of 20.55. Its Beta is 1.02 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Alpha of 10.41 and a Mean Return of 1.76.
The Schwab U.S. Large-Cap ETF (SCHX) has a Treynor Ratio of 14.06 with a Alpha of -0.14 and a R-squared of 99.83. Its Mean Return is 1.24 while SCHX’s Sharpe Ratio is 1.03. Furthermore, the fund has a Beta of 1.02 and a Standard Deviation of 13.8.
VGT’s Mean Return is 0.52 points higher than that of SCHX and its R-squared is 24.99 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than SCHX. The Alpha and Beta of VGT are 10.55 points higher and 0.00 points lower than SCHX’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 SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% 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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.
VGT’s CAGR is 6.23 percentage points higher than that of SCHX and as a result, would have yielded $27,513 more on a $10,000 investment. Thus, VGT outperformed SCHX by 6.23% annually.
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