The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VO and SCHA? And which fund is better?
VO and SCHA have the same expense ratio: 0.04%. VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than SCHA over the past ten years.
In this article, we’ll compare VO vs. SCHA. We’ll look at holdings and portfolio growth, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VO’s and SCHA’s fund composition, industry exposure, and performance and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Schwab U.S. Small-Cap ETF|
|Category||Mid-Cap Blend||Small Blend|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
VO’s dividend yield is 0.25% higher than that of SCHA (1.23% vs. 0.98%). Also, VO yielded on average 1.71% more per year over the past decade (14.34% vs. 12.62%). VO and SCHA have the same expense ratio: 0.04%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
VO is 7.10% more exposed to the Technology sector than SCHA (22.01% vs 14.91%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 3.47% lower and 2.36% lower respectively (13.03% vs. 16.5% and 12.12% vs. 14.48%). In total, Basic Materials, Energy, and Utilities also make up 3.14% more of the fund’s holdings compared to SCHA (12.30% vs. 9.16%).
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|Penn National Gaming Inc||0.27%|
|Axon Enterprise Inc||0.27%|
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Beta of 1.11 with a Mean Return of 1.14 and a Sharpe Ratio of 0.83. Its R-squared is 92.22 while VO’s Standard Deviation is 15.65. Furthermore, the fund has a Alpha of -2.71 and a Treynor Ratio of 11.32.
The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a Standard Deviation of 18.68 and a R-squared of 82.26. Its Beta is 1.25 while SCHA’s Alpha is -4.65. Furthermore, the fund has a Sharpe Ratio of 0.7 and a Treynor Ratio of 9.62.
VO’s Mean Return is 0.00 points lower than that of SCHA and its R-squared is 9.96 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than SCHA. The Alpha and Beta of VO are 1.94 points higher and 0.14 points lower than SCHA’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $32,177. This is a profit of $22,177 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
VO’s CAGR is 1.71 percentage points higher than that of SCHA and as a result, would have yielded $2,142 more on a $10,000 investment. Thus, VO outperformed SCHA by 1.71% annually.
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