The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VO and SCHP? And which fund is better?
The expense ratio of VO is 0.01 percentage points lower than SCHP’s (0.04% vs. 0.05%). VO also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, VO has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare VO vs. SCHP. We’ll look at fund composition and portfolio growth, as well as at their performance and holdings. Moreover, I’ll also discuss VO’s and SCHP’s risk metrics, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Schwab U.S. TIPS ETF|
|Category||Mid-Cap Blend||Inflation-Protected Bond|
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
VO’s dividend yield is 0.74% lower than that of SCHP (1.23% vs. 1.97%). Also, VO yielded on average 10.42% more per year over the past decade (14.34% vs. 3.92%). The expense ratio of VO is 0.01 percentage points lower than SCHP’s (0.04% vs. 0.05%).
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|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%.
|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Standard Deviation of 15.65 and a Mean Return of 1.14. Its Treynor Ratio is 11.32 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a Alpha of -2.71 and a Beta of 1.11.
The Schwab U.S. TIPS ETF (SCHP) has a Standard Deviation of 4.32 with a Treynor Ratio of 2.31 and a Beta of 1.17. Its Sharpe Ratio is 0.64 while SCHP’s R-squared is 66.16. Furthermore, the fund has a Alpha of -0.5 and a Mean Return of 0.28.
VO’s Mean Return is 0.86 points higher than that of SCHP and its R-squared is 26.06 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than SCHP. The Alpha and Beta of VO are 2.21 points lower and 0.06 points lower than SCHP’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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% 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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
VO’s CAGR is 10.42 percentage points higher than that of SCHP and as a result, would have yielded $17,759 more on a $10,000 investment. Thus, VO outperformed SCHP by 10.42% annually.
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