Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Schwab U.S. Broad Market ETF (SCHB) are two of the most popular ETFs on the market.
As an investor, deciding between the two can be challenging. VIG vs SCHB:
First, let’s look at the basics. VIG is a Vanguard Large Blend fund, while SCHB is a Schwab ETFs Large Blend fund. While both funds are similar, there are some key differences to consider. For example, VIG has a higher expense ratio and exposure to the industrials sector, while SCHB has a lower expense ratio and a more diverse portfolio.
In this article, I’ll dive deeper into the differences between VIG and SCHB.
We’ll look at their performance, risk metrics, and portfolio growth to get a better understanding of which fund is better suited for your investment goals.
So, let’s get started!
What is VIG?
VIG Overview
I have been researching the Vanguard Dividend Appreciation Index Fund ETF Shares (VIG), which is a large blend fund.
VIG aims to track the performance of the NASDAQ US Dividend Achievers Select Index, which includes companies that have a history of increasing their dividends for at least 10 consecutive years.
VIG’s investment objective is to provide investors with a low-cost way to gain exposure to U.S. companies with a history of increasing dividends.
VIG Investment Strategy
VIG invests in companies across all sectors of the U.S. equity market.
However, the fund has a higher exposure to the industrials sector, which accounts for over 20% of its holdings.
The fund also invests in consumer goods, healthcare, and technology sectors, among others.
VIG uses a passive investment strategy and invests in a diversified portfolio of stocks that have a history of increasing their dividends.
According to the Vanguard website, VIG’s investment strategy is based on the belief that companies that have a history of increasing their dividends are financially stable and have a strong competitive advantage.
VIG’s investment approach is to invest in companies that have a track record of increasing their dividends, which can help provide investors with a steady stream of income and long-term capital appreciation.
VIG is a low-cost ETF that provides investors with exposure to U.S. companies that have a history of increasing their dividends.
The fund’s investment strategy is based on a long-term approach, and it aims to provide investors with a steady stream of income and long-term capital appreciation.
What is SCHB?
SCHB Overview
SCHB stands for the Schwab U.S. Broad Market ETF. It is an exchange-traded fund that aims to track the performance of the Dow Jones U.S. Broad Stock Market Index.
The fund was launched in 2009 and has since then grown to become one of the largest ETFs in the market.
SCHB has a total net asset value of $29.6 billion and holds over 2,500 stocks, making it a diverse investment option.
SCHB is a large-cap blend fund, which means it invests in a mix of growth and value stocks of large-cap companies.
The fund’s holdings are primarily in the financial, technology, and healthcare sectors. SCHB is a passively managed fund, meaning that it aims to replicate the performance of its underlying index, rather than trying to outperform it.
SCHB Investment Strategy
SCHB’s investment strategy is to invest in a diversified portfolio of U.S. stocks with a focus on large-cap companies.
The fund aims to provide investors with exposure to the broad U.S. equity market by tracking the performance of the Dow Jones U.S. Broad Stock Market Index.
SCHB’s investment strategy is passive, meaning that it aims to replicate the performance of its underlying index.
SCHB’s investment strategy is designed to provide investors with a low-cost, diversified exposure to the U.S. equity market.
The fund’s focus on large-cap companies means that it is less exposed to the risks associated with investing in smaller companies.
Additionally, SCHB’s focus on value and growth stocks means that it has a mix of both high-growth and more stable companies in its portfolio.
SCHB is a low-cost, diversified investment option for investors looking for exposure to the broad U.S. equity market.
Its investment strategy is passive, meaning that it aims to replicate the performance of its underlying index, and its focus on large-cap companies means that it is less exposed to the risks associated with investing in smaller companies.
Comparison of VIG and SCHB
Performance Comparison
When it comes to performance, SCHB has provided higher returns than VIG over the past ten years.
According to data from ETF Database, SCHB’s 10-year annualized return is 14.24%, while VIG’s is 11.62%. However, it’s important to note that past performance does not guarantee future results.
Risk Comparison
VIG has a lower standard deviation than SCHB, indicating that it is less risky. According to Minafi, VIG’s standard deviation is 12.38%, while SCHB’s is 14.03%.
However, VIG has a higher exposure to the industrials sector than SCHB, which may increase its risk in that area.
Expense Ratio Comparison
SCHB has a lower expense ratio than VIG, which could make it a more cost-effective option for investors.
According to Ask Finny, SCHB’s expense ratio is 0.03%, while VIG’s is 0.08%. This means that investors in SCHB will pay less in fees over time. In terms of holdings, both VIG and SCHB have a large number of stocks in their portfolios.
VIG’s top holdings include Microsoft, Johnson & Johnson, and Visa, while SCHB’s top holdings include Apple, Microsoft, and Amazon. Both funds have a focus on large-cap stocks.
When comparing VIG vs. SCHB, it’s important to consider factors such as performance, risk, and expense ratio.
While SCHB has provided higher returns and has a lower expense ratio, VIG has a lower standard deviation and a different industry exposure.
Investors should carefully consider their investment goals and risk tolerance before choosing between these two funds.
| Fund | Expense Ratio | 10-Year Annualized Return | Standard Deviation |
|---|---|---|---|
| VIG | 0.08% | 11.62% | 12.38% |
| SCHB | 0.03% | 14.24% | 14.03% |
Which One Should You Choose?
Investment Goals
When deciding between VIG and SCHB, it’s important to consider your investment goals.
If you’re looking for a fund that focuses on dividend growth and appreciation, VIG might be the better choice.
On the other hand, if you’re looking for a fund that tracks the overall U.S. stock market and provides broad exposure to a range of sectors, SCHB might be the way to go.
Investment Horizon
Your investment horizon is also a crucial factor to consider.
If you’re investing for the long-term, VIG’s focus on dividend growth and appreciation may be a good fit for you.
However, if you’re investing for the short-term, SCHB’s broad market exposure may be more suitable.
Investment Preference
Finally, your investment preference is another important consideration.
If you prefer a fund with a lower expense ratio and a lower standard deviation, SCHB may be the better choice.
However, if you’re willing to pay a slightly higher expense ratio for a fund that focuses on dividend growth and appreciation, VIG could be the way to go.
Ultimately, the decision between VIG and SCHB depends on your individual investment goals, horizon, and preference.
It’s important to do your research and consider all factors before making a decision.
VIG vs SCHB: In A Nutshell
Both are among the Top 100 ETFs, with VIG being a Vanguard Large Blend fund and SCHB a Schwab ETFs Large Blend fund. So, let’s take a closer look at what sets them apart.
Firstly, the expense ratio of VIG is 0.03 percentage points higher than SCHB’s (0.06% vs. 0.03%). This means that SCHB is slightly cheaper to invest in than VIG.
Additionally, VIG has a higher exposure to the industrials sector, while SCHB has a more diverse mix of sectors. VIG also has a lower standard deviation, which means it is less volatile than SCHB.
When it comes to performance, SCHB has provided higher returns than VIG over the past ten years.
However, it’s important to note that past performance is not a guarantee of future results. So, while SCHB has outperformed VIG in the past, this may not necessarily continue in the future.
Looking at their holdings and fund composition, VIG focuses on companies with a history of increasing dividends, while SCHB tracks the performance of the entire U.S. equity market.
VIG’s portfolio is also more concentrated, with its top ten holdings accounting for over 50% of the fund’s total assets, while SCHB’s top ten holdings make up only around 20% of the fund’s total assets.
VIG and SCHB have some notable differences.
VIG has a higher expense ratio, a higher exposure to the industrials sector, and a lower standard deviation.
SCHB, on the other hand, has provided higher returns over the past ten years, has a more diverse mix of sectors, and a less concentrated portfolio.
Ultimately, the choice between VIG and SCHB will depend on an investor’s personal investment goals and risk tolerance.
