VIG vs. SCHP: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VIG and SCHP? And which fund is better?

The expense ratio of VIG is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%). VIG also has a high exposure to the industrials sector while SCHP is mostly comprised of AAA bonds. Overall, VIG has provided higher returns than SCHP over the past ten years.

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

Summary

VIG SCHP
Name Vanguard Dividend Appreciation Index Fund ETF Shares Schwab U.S. TIPS ETF
Category Large Blend Inflation-Protected Bond
Issuer Vanguard Schwab ETFs
AUM 71.92B 18.41B
Avg. Return 13.35% 3.92%
Div. Yield 1.56% 1.97%
Expense Ratio 0.06% 0.05%

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. 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%.

VIG’s dividend yield is 0.41% lower than that of SCHP (1.56% vs. 1.97%). Also, VIG yielded on average 9.43% more per year over the past decade (13.35% vs. 3.92%). The expense ratio of VIG is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%).

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Fund Composition

Holdings

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
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%
Coca-Cola Co 1.98%

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%.

SCHP - Holdings

SCHP Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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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Risk Analysis

VIG SCHP
Mean Return 1.09 0.28
R-squared 92.2 66.16
Std. Deviation 12.25 4.32
Alpha 0.12 -0.5
Beta 0.86 1.17
Sharpe Ratio 1.01 0.64
Treynor Ratio 14.33 2.31

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Standard Deviation of 12.25 with a R-squared of 92.2 and a Mean Return of 1.09. Its Treynor Ratio is 14.33 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Beta of 0.86 and a Alpha of 0.12.

The Schwab U.S. TIPS ETF (SCHP) has a Standard Deviation of 4.32 with a Treynor Ratio of 2.31 and a Alpha of -0.5. Its Beta is 1.17 while SCHP’s Mean Return is 0.28. Furthermore, the fund has a R-squared of 66.16 and a Sharpe Ratio of 0.64.

VIG’s Mean Return is 0.81 points higher than that of SCHP and its R-squared is 26.04 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than SCHP. The Alpha and Beta of VIG are 0.62 points higher and 0.31 points lower than SCHP’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. SCHP - Annual Returns

Year VIG SCHP
2020 15.46% 10.94%
2019 29.71% 8.36%
2018 -2.02% -1.31%
2017 22.22% 2.95%
2016 11.84% 4.6%
2015 -1.95% -1.5%
2014 10.06% 3.56%
2013 28.99% -8.66%
2012 11.61% 6.83%
2011 6.21% 13.38%
2010 14.67% 0.0%

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 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.

Portfolio Growth

VIG vs. SCHP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $33,096 13.35%
SCHP $10,000 $14,418 3.92%

A $10,000 investment in VIG would have resulted in a final balance of $33,096. This is a profit of $23,096 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

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%.

VIG’s CAGR is 9.43 percentage points higher than that of SCHP and as a result, would have yielded $18,678 more on a $10,000 investment. Thus, VIG outperformed SCHP by 9.43% annually.


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