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VO vs. SCHD: What’s The Difference?

The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VO and SCHD? And which fund is better?

The expense ratio of VO is 0.02 percentage points lower than SCHD’s (0.04% vs. 0.06%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than SCHD over the past ten years.

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

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Summary

VOSCHD
NameVanguard Mid-Cap Index Fund ETF SharesSchwab U.S. Dividend Equity ETF
CategoryMid-Cap BlendLarge Value
IssuerVanguardSchwab ETFs
AUM154.08B26B
Avg. Return14.34%14.80%
Div. Yield1.23%2.89%
Expense Ratio0.04%0.06%

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. 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%.

VO’s dividend yield is 1.66% lower than that of SCHD (1.23% vs. 2.89%). Also, VO yielded on average 0.47% less per year over the past decade (14.34% vs. 14.80%). The expense ratio of VO is 0.02 percentage points lower than SCHD’s (0.04% vs. 0.06%).

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Fund Composition

Industry Exposure

VO vs. SCHD - Industry Exposure

VOSCHD
Technology22.01%16.26%
Industrials11.92%18.05%
Energy3.82%1.87%
Communication Services5.61%4.96%
Utilities5.12%0.0%
Healthcare13.03%12.64%
Consumer Defensive3.25%14.04%
Real Estate8.67%0.0%
Financial Services11.08%21.69%
Consumer Cyclical12.12%8.36%
Basic Materials3.36%2.13%

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. 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%.

VO is 5.75% more exposed to the Technology sector than SCHD (22.01% vs 16.26%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.39% higher and 3.76% higher respectively (13.03% vs. 12.64% and 12.12% vs. 8.36%). In total, Basic Materials, Energy, and Utilities also make up 8.30% more of the fund’s holdings compared to SCHD (12.30% vs. 4.00%).

Holdings

VO - Holdings

VO HoldingsWeight
IDEXX Laboratories Inc0.78%
DocuSign Inc0.75%
Marvell Technology Inc0.68%
IQVIA Holdings Inc0.68%
Chipotle Mexican Grill Inc0.63%
Veeva Systems Inc Class A0.62%
Digital Realty Trust Inc0.62%
Centene Corp0.62%
Aptiv PLC0.62%
Carrier Global Corp Ordinary Shares0.61%

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%.

SCHD - Holdings

SCHD HoldingsWeight
Merck & Co Inc4.24%
The Home Depot Inc4.19%
Texas Instruments Inc4.16%
Broadcom Inc4.15%
Amgen Inc4.11%
PepsiCo Inc4.09%
BlackRock Inc4.05%
Pfizer Inc3.97%
Verizon Communications Inc3.96%
Cisco Systems Inc3.96%

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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Risk Analysis

VOSCHD
Mean Return1.140
R-squared92.220
Std. Deviation15.650
Alpha-2.710
Beta1.110
Sharpe Ratio0.830
Treynor Ratio11.320

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Alpha of -2.71 and a Beta of 1.11. Its Treynor Ratio is 11.32 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a Standard Deviation of 15.65 and a Mean Return of 1.14.

The Schwab U.S. Dividend Equity ETF (SCHD) has a Alpha of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Beta is 0 while SCHD’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.

VO’s Mean Return is 1.14 points higher than that of SCHD and its R-squared is 92.22 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than SCHD. The Alpha and Beta of VO are 2.71 points lower and 1.11 points higher than SCHD’s Alpha and Beta.

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Performance

Annual Returns

VO vs. SCHD - Annual Returns

YearVOSCHD
202018.22%15.11%
201931.04%27.28%
2018-9.21%-5.46%
201719.25%20.88%
201611.23%16.25%
2015-1.34%-0.21%
201413.76%11.66%
201335.15%32.9%
201215.98%11.4%
2011-1.96%0.0%
201025.57%0.0%

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 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.

Portfolio Growth

VO vs. SCHD - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VO$10,000$28,29814.34%
SCHD$10,000$28,82314.80%

A $10,000 investment in VO would have resulted in a final balance of $28,298. This is a profit of $18,298 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.34%.

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%.

VO’s CAGR is 0.47 percentage points lower than that of SCHD and as a result, would have yielded $525 less on a $10,000 investment. Thus, VO performed worse than SCHD by 0.47% annually.


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