The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between VO and SCHX? And which fund is better?
The expense ratio of VO is 0.01 percentage points higher than SCHX’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 SCHX over the past ten years.
In this article, we’ll compare VO vs. SCHX. We’ll look at performance and risk metrics, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VO’s and SCHX’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Schwab U.S. Large-Cap 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. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.
VO’s dividend yield is 0.18% lower than that of SCHX (1.23% vs. 1.41%). Also, VO yielded on average 0.27% less per year over the past decade (14.34% vs. 14.60%). The expense ratio of VO is 0.01 percentage points higher than SCHX’s (0.04% vs. 0.03%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
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 ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.
SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.
VO is 3.12% less exposed to the Technology sector than SCHX (22.01% vs 25.13%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.01% lower and 0.49% higher respectively (13.03% vs. 13.04% and 12.12% vs. 11.63%). In total, Basic Materials, Energy, and Utilities also make up 4.93% more of the fund’s holdings compared to SCHX (12.30% vs. 7.37%).
|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||2.08%|
|Alphabet Inc A||1.84%|
|Alphabet Inc Class C||1.78%|
|Berkshire Hathaway Inc Class B||1.32%|
|JPMorgan Chase & Co||1.18%|
SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.
Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Beta of 1.11 with a Mean Return of 1.14 and a R-squared of 92.22. Its Standard Deviation is 15.65 while VO’s Alpha is -2.71. Furthermore, the fund has a Sharpe Ratio of 0.83 and a Treynor Ratio of 11.32.
The Schwab U.S. Large-Cap ETF (SCHX) has a Mean Return of 1.24 with a Beta of 1.02 and a R-squared of 99.83. Its Treynor Ratio is 14.06 while SCHX’s Alpha is -0.14. Furthermore, the fund has a Sharpe Ratio of 1.03 and a Standard Deviation of 13.8.
VO’s Mean Return is 0.10 points lower than that of SCHX and its R-squared is 7.61 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than SCHX. The Alpha and Beta of VO are 2.57 points lower and 0.09 points higher than SCHX’s Alpha and Beta.
BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Gemini - the simplest and cheapest broker I've found! Click here to read more (link to Gemini).
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 SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% 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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.
VO’s CAGR is 0.27 percentage points lower than that of SCHX and as a result, would have yielded $4,810 less on a $10,000 investment. Thus, VO performed worse than SCHX by 0.27% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.