The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VIG and SCHD? And which fund is better?
VIG and SCHD have the same expense ratio: 0.06%. VIG also has a lower exposure to the industrials sector and a higher standard deviation. Overall, VIG has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare VIG vs. SCHD. We’ll look at holdings and annual returns, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss VIG’s and SCHD’s performance, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||Schwab U.S. Dividend Equity ETF|
|Category||Large Blend||Large Value|
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
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%.
VIG’s dividend yield is 1.33% lower than that of SCHD (1.56% vs. 2.89%). Also, VIG yielded on average 1.46% less per year over the past decade (13.35% vs. 14.80%). VIG and SCHD have the same expense ratio: 0.06%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
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%.
VIG is 0.82% less exposed to the Industrials sector than SCHD (17.23% vs 18.05%). VIG’s exposure to Financial Services and Healthcare stocks is 4.51% lower and 2.88% higher respectively (17.18% vs. 21.69% and 15.52% vs. 12.64%). In total, Energy, Utilities, and Communication Services also make up 1.16% less of the fund’s holdings compared to SCHD (5.67% vs. 6.83%).
|JPMorgan Chase & Co||3.8%|
|Johnson & Johnson||3.67%|
|Visa Inc Class A||3.22%|
|UnitedHealth Group Inc||3.22%|
|The Home Depot Inc||2.91%|
|Procter & Gamble Co||2.82%|
|Comcast Corp Class A||2.21%|
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
|Merck & Co Inc||4.24%|
|The Home Depot Inc||4.19%|
|Texas Instruments Inc||4.16%|
|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%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Treynor Ratio of 14.33 with a Mean Return of 1.09 and a Sharpe Ratio of 1.01. Its Alpha is 0.12 while VIG’s R-squared is 92.2. Furthermore, the fund has a Beta of 0.86 and a Standard Deviation of 12.25.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Treynor Ratio of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Mean Return is 0 while SCHD’s Alpha is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.
VIG’s Mean Return is 1.09 points higher than that of SCHD and its R-squared is 92.20 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than SCHD. The Alpha and Beta of VIG are 0.12 points higher and 0.86 points higher than SCHD’s Alpha and Beta.
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VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VIG would have resulted in a final balance of $27,919. This is a profit of $17,919 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
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%.
VIG’s CAGR is 1.46 percentage points lower than that of SCHD and as a result, would have yielded $904 less on a $10,000 investment. Thus, VIG performed worse than SCHD by 1.46% annually.
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