The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between VO and SCHB? And which fund is better?
The expense ratio of VO is 0.01 percentage points higher than SCHB’s (0.04% vs. 0.03%). VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare VO vs. SCHB. We’ll look at holdings and performance, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VO’s and SCHB’s fund composition, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Schwab U.S. Broad Market ETF|
|Category||Mid-Cap Blend||Large 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. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
VO’s dividend yield is 0.16% lower than that of SCHB (1.23% vs. 1.39%). Also, VO yielded on average 0.10% less per year over the past decade (14.34% vs. 14.43%). The expense ratio of VO is 0.01 percentage points higher than SCHB’s (0.04% vs. 0.03%).
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. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.
SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.
VO is 2.14% less exposed to the Technology sector than SCHB (22.01% vs 24.15%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.34% lower and 0.22% higher respectively (13.03% vs. 13.37% and 12.12% vs. 11.9%). In total, Basic Materials, Energy, and Utilities also make up 4.75% more of the fund’s holdings compared to SCHB (12.30% vs. 7.55%).
|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%.
|Facebook Inc A||1.88%|
|Alphabet Inc A||1.66%|
|Alphabet Inc Class C||1.61%|
|Berkshire Hathaway Inc Class B||1.19%|
|JPMorgan Chase & Co||1.06%|
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Standard Deviation of 15.65 with a Treynor Ratio of 11.32 and a Beta of 1.11. Its R-squared is 92.22 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a Mean Return of 1.14 and a Alpha of -2.71.
The Schwab U.S. Broad Market ETF (SCHB) has a Sharpe Ratio of 1 with a Standard Deviation of 14.12 and a Beta of 1.04. Its R-squared is 99.33 while SCHB’s Treynor Ratio is 13.58. Furthermore, the fund has a Mean Return of 1.23 and a Alpha of -0.58.
VO’s Mean Return is 0.09 points lower than that of SCHB and its R-squared is 7.11 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than SCHB. The Alpha and Beta of VO are 2.13 points lower and 0.07 points higher than SCHB’s Alpha and Beta.
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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% 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 SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.
VO’s CAGR is 0.10 percentage points lower than that of SCHB and as a result, would have yielded $4,177 less on a $10,000 investment. Thus, VO performed worse than SCHB by 0.10% annually.
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