The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between VO and SCHG? And which fund is better?
VO and SCHG have the same expense ratio: 0.04%. VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than SCHG over the past ten years.
In this article, we’ll compare VO vs. SCHG. We’ll look at industry exposure and portfolio growth, as well as at their performance and annual returns. Moreover, I’ll also discuss VO’s and SCHG’s risk metrics, fund composition, and holdings and examine how these affect their overall returns.
Summary
| VO | SCHG | |
| Name | Vanguard Mid-Cap Index Fund ETF Shares | Schwab U.S. Large-Cap Growth ETF |
| Category | Mid-Cap Blend | Large Growth |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 154.08B | 15.16B |
| Avg. Return | 14.34% | 17.81% |
| Div. Yield | 1.23% | 0.43% |
| Expense Ratio | 0.04% | 0.04% |
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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
VO’s dividend yield is 0.80% higher than that of SCHG (1.23% vs. 0.43%). Also, VO yielded on average 3.47% less per year over the past decade (14.34% vs. 17.81%). VO and SCHG have the same expense ratio: 0.04%.
Fund Composition
Industry Exposure
| VO | SCHG | |
| Technology | 22.01% | 39.21% |
| Industrials | 11.92% | 3.01% |
| Energy | 3.82% | 0.2% |
| Communication Services | 5.61% | 17.07% |
| Utilities | 5.12% | 0.0% |
| Healthcare | 13.03% | 12.05% |
| Consumer Defensive | 3.25% | 2.15% |
| Real Estate | 8.67% | 1.64% |
| Financial Services | 11.08% | 7.98% |
| Consumer Cyclical | 12.12% | 15.01% |
| Basic Materials | 3.36% | 1.68% |
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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
VO is 17.20% less exposed to the Technology sector than SCHG (22.01% vs 39.21%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.98% higher and 2.89% lower respectively (13.03% vs. 12.05% and 12.12% vs. 15.01%). In total, Basic Materials, Energy, and Utilities also make up 10.42% more of the fund’s holdings compared to SCHG (12.30% vs. 1.88%).
Holdings
| VO Holdings | Weight |
| IDEXX Laboratories Inc | 0.78% |
| DocuSign Inc | 0.75% |
| 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% |
| Centene Corp | 0.62% |
| Aptiv PLC | 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%.
| SCHG Holdings | Weight |
| Apple Inc | 11.49% |
| Microsoft Corp | 10.91% |
| Amazon.com Inc | 7.89% |
| Facebook Inc A | 4.45% |
| Alphabet Inc A | 3.93% |
| Alphabet Inc Class C | 3.82% |
| Tesla Inc | 2.8% |
| NVIDIA Corp | 2.67% |
| Visa Inc Class A | 2.12% |
| UnitedHealth Group Inc | 2.02% |
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
Risk Analysis
| VO | SCHG | |
| Mean Return | 1.14 | 1.46 |
| R-squared | 92.22 | 92.92 |
| Std. Deviation | 15.65 | 14.78 |
| Alpha | -2.71 | 1.97 |
| Beta | 1.11 | 1.05 |
| Sharpe Ratio | 0.83 | 1.14 |
| Treynor Ratio | 11.32 | 16.3 |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Alpha of -2.71 with a Mean Return of 1.14 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 R-squared of 92.22.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Beta of 1.05 with a Alpha of 1.97 and a Sharpe Ratio of 1.14. Its R-squared is 92.92 while SCHG’s Standard Deviation is 14.78. Furthermore, the fund has a Mean Return of 1.46 and a Treynor Ratio of 16.3.
VO’s Mean Return is 0.32 points lower than that of SCHG and its R-squared is 0.70 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than SCHG. The Alpha and Beta of VO are 4.68 points lower and 0.06 points higher than SCHG’s Alpha and Beta.
Performance
Annual Returns
| Year | VO | SCHG |
| 2020 | 18.22% | 39.13% |
| 2019 | 31.04% | 36.21% |
| 2018 | -9.21% | -1.35% |
| 2017 | 19.25% | 28.04% |
| 2016 | 11.23% | 6.76% |
| 2015 | -1.34% | 3.26% |
| 2014 | 13.76% | 15.74% |
| 2013 | 35.15% | 33.96% |
| 2012 | 15.98% | 17.02% |
| 2011 | -1.96% | -0.67% |
| 2010 | 25.57% | 16.83% |
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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VO | $10,000 | $32,177 | 14.34% |
| SCHG | $10,000 | $47,556 | 17.81% |
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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
VO’s CAGR is 3.47 percentage points lower than that of SCHG and as a result, would have yielded $15,379 less on a $10,000 investment. Thus, VO performed worse than SCHG by 3.47% annually.
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