VNQ vs SCHD Which ETF is Better

Are you looking to invest in the stock market but don’t know where to start? Two popular ETFs, the Vanguard Real Estate Index Fund ETF Shares (VNQ) and the Schwab U.S. Dividend Equity ETF (SCHD), are both among the Top 100 ETFs.

But what’s the difference between VNQ and SCHD? And which fund is better? Expense ratio is an important factor to consider when investing in ETFs. SCHD has a lower expense ratio of 0.06% compared to VNQ’s 0.12%. However, VNQ has a higher dividend yield of 4.88% compared to SCHD’s 4.43%.

Additionally, VNQ is a Vanguard Real Estate fund while SCHD is a Schwab ETFs Large Value fund. These differences in expense ratio, dividend yield, and fund composition can affect your investment decisions.In this article, we’ll break down the key differences between these two ETFs to help you make an informed decision.

Key Takeaways VNQ Vs SCHD

  • SCHD has provided higher returns than VNQ over the past decade.
  • VNQ has a higher expense ratio and exposure to real estate sector than SCHD.
  • Fund composition of VNQ is 100% real estate sector, while SCHD has more exposure to financial services and technology.
  • A $10,000 investment in SCHD would result in a higher final balance with a higher CAGR than a $10,000 investment in VNQ.

ETF Comparison VNQ Vs SCHD

When comparing VNQ and SCHD, it is important to note that VNQ is a Vanguard Real Estate fund with a higher expense ratio and exposure to the real estate sector, while SCHD is a Schwab ETFs Large Value fund that has provided higher returns than VNQ over the past decade and more exposure to financial services and technology.

VNQ’s fund composition is 100% real estate sector, which makes it an ideal investment strategy for those seeking exposure to the real estate industry.

On the other hand, SCHD’s composition is diversified with more exposure to financial services and technology, making it a better option for investors seeking a broader range of investment opportunities.

Investors should also consider the expense ratio and returns when choosing between VNQ and SCHD. VNQ has a higher expense ratio compared to SCHD and has yielded lower returns over the past decade.

However, VNQ’s mean return, R-squared, alpha, and beta are higher than SCHD’s. This information is crucial for investors to determine which ETF aligns with their investment strategy and risk tolerance level.

Key Differences VNQ Vs SCHD

The main disparities between the two ETFs lie in their composition, with VNQ having 100% exposure to the real estate sector and SCHD having more exposure to financial services and technology.

This difference in composition affects the performance of the ETFs, with SCHD providing higher returns than VNQ over the past decade. However, VNQ has a higher mean return, R-squared, alpha, and beta than SCHD.

Investors looking for exposure to the real estate sector may prefer VNQ due to its 100% exposure to the industry. VNQ also has a higher dividend yield than SCHD.

However, those looking for a more diverse portfolio may prefer SCHD, which has a mid-section with moderate exposure to communication services, consumer cyclical, healthcare, consumer defensive, and technology stocks.

VNQ Vs SCHD: What You Need To Know

Overview of VNQ and SCHD

When it comes to investing in the stock market, there are many different options available. Two popular choices for investors are the Vanguard Real Estate ETF (VNQ) and the Schwab U.S. Dividend Equity ETF (SCHD).

VNQ is a real estate ETF that invests in companies that own and operate real estate properties. SCHD, on the other hand, is an equity ETF that focuses on high-quality dividend-paying companies. Both funds have a strong track record of performance and are well-regarded by investors.

Comparing VNQ and SCHD

One of the main differences between VNQ and SCHD is their expense ratios. VNQ has a higher expense ratio of 0.12%, while SCHD has a lower expense ratio of 0.06%. This means that SCHD is a more cost-effective option for investors.

Another difference between the two funds is their exposure to different sectors. VNQ is focused on real estate, while SCHD has a more diversified portfolio that includes companies from various sectors.

This means that SCHD may be a better option for investors who are looking for more diversification in their portfolio.

Performance and Volatility

When it comes to performance, both VNQ and SCHD have delivered strong returns to investors. VNQ has a year-to-date return of 28.2%, while SCHD has a year-to-date return of 20.5%.

In terms of volatility, both funds have similar risk metrics. VNQ has a standard deviation of 19.4%, while SCHD has a standard deviation of 17.6%. This means that both funds have a similar level of risk and volatility.

When comparing the two funds, it’s important to consider your investment goals and risk tolerance. If you’re looking for exposure to real estate and are willing to pay a slightly higher expense ratio, then VNQ may be the better option. However, if you’re looking for a more diversified portfolio with a lower expense ratio, then SCHD may be the better choice.

Expense Ratio VNQ Vs SCHD

When comparing VNQ and SCHD, one of the most important factors to consider is their expense ratio. This is the fee charged by the fund manager for managing the fund. It is expressed as a percentage of the fund’s assets and is deducted from the fund’s returns.

SCHD has a lower expense ratio than VNQ. SCHD’s expense ratio is 0.06%, while VNQ’s expense ratio is 0.12%. This means that for every $1,000 you invest in SCHD, you will pay $0.60 in fees per year, whereas for every $1,000 you invest in VNQ, you will pay $1.20 in fees per year.

While the difference in expense ratio may seem small, it can add up over time, especially if you are investing a large amount of money. For example, if you invest $10,000 in SCHD and $10,000 in VNQ, you will pay $6 in fees per year for SCHD and $12 in fees per year for VNQ.

It is important to note that expense ratio is not the only factor to consider when choosing between VNQ and SCHD. You should also consider other factors like dividend yield, holdings, and performance. However, if you are looking for a low-cost option, SCHD is the better choice between the two.

VNQ vs SCHD Fund Composition

When comparing VNQ vs SCHD, it’s important to take a look at their fund compositions.

VNQ, or the Vanguard Real Estate ETF, is designed to track the performance of the MSCI US REIT Index. This index includes companies that invest in real estate, such as office buildings, hotels, and shopping centers.

As of May 31, 2023, VNQ had a total of 170 holdings and an expense ratio of 0.12%. The top three holdings in VNQ are American Tower Corp, Prologis Inc, and Crown Castle International Corp.

On the other hand, SCHD, or the Schwab U.S. Dividend Equity ETF, is designed to track the performance of the Dow Jones U.S. Dividend 100 Index. This index includes companies that have a history of paying consistent dividends.

As of May 31, 2023, SCHD had a total of 101 holdings and an expense ratio of 0.06%. The top three holdings in SCHD are Microsoft Corp, Johnson & Johnson, and Procter & Gamble Co.

When it comes to sector exposure, VNQ has a higher exposure to the real estate sector, while SCHD has a higher exposure to the information technology and healthcare sectors. VNQ has a standard deviation of 16.22%, while SCHD has a standard deviation of 14.40%.

In terms of dividends, both VNQ and SCHD have historically provided consistent dividends to their investors. However, VNQ has a higher dividend yield of 4.88%, compared to SCHD’s 4.43%.

Before you go…

Frequently Asked Questions VNQ Vs SCHD

What Is The Schwab Version Of VNQ?

The Schwab version of VNQ is SCHH. SCHH is an ETF that tracks the performance of the Dow Jones U.S. Select REIT Index. u003cbru003eu003cbru003eIt invests in companies that own and operate income-producing real estate, such as apartments, shopping centers, and office buildings.

Is SCHD A Suitable Long-Term ETF?

SCHD is an ETF that invests in companies with a history of paying dividends. It is a suitable long-term ETF for investors who are looking for a steady source of income. u003cbru003eu003cbru003eHowever, it is important to keep in mind that past performance is not indicative of future results.

What Is The Vanguard Counterpart To SCHD?

The Vanguard counterpart to SCHD is the Vanguard Dividend Appreciation ETF (VIG). VIG invests in companies that have a history of increasing their dividends over time. u003cbru003eu003cbru003eIt is a suitable ETF for investors who are looking for a combination of income and growth.

Is SCHD A Good Core Investment Option?

SCHD can be a good core investment option for investors who are looking for a low-cost ETF that invests in companies with a history of paying dividends. However, it is important to keep in mind that diversification is key to building a well-rounded portfolio.

What Are The Differences Between VNQ And SCHD?

VNQ is a real estate ETF that invests in companies that own and operate income-producing real estate, such as apartments, shopping centers, and office buildings. SCHD is an ETF that invests in companies with a history of paying dividends. u003cbru003eu003cbru003eThe main differences between VNQ and SCHD are the types of companies they invest in and their investment objectives.

Which ETF Is Better For Income: VNQ Or SCHD?

Both VNQ and SCHD can be suitable ETFs for investors who are looking for a source of income. u003cbru003eu003cbru003eVNQ invests in real estate companies that generate income from rent, while SCHD invests in companies with a history of paying dividends. The choice between VNQ and SCHD depends on the investor’s investment objectives and risk tolerance.

What Is The Historical Performance Of VNQ And SCHD During Economic Downturns?

During economic downturns, both VNQ and SCHD have experienced significant declines in value. u003cbru003eu003cbru003eHowever, the role of inflation and impact of interest rates have varied. Real estate sector exposure in VNQ may make it more vulnerable to interest rate increases, while SCHD’s diversified holdings may provide some protection.

What Is The Tax Efficiency Of VNQ And SCHD For Investors?

Investors should consider the tax implications of VNQ and SCHD according to their investment goals. u003cbru003eu003cbru003eBoth ETFs have different tax efficiencies due to their structure and holdings, which should be evaluated carefully. Analyzing data on their tax efficiency can aid investors in making informed decisions.

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