The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between VT and SCHB? And which fund is better?
The expense ratio of VT is 0.05 percentage points higher than SCHB’s (0.08% vs. 0.03%). VT also has a lower exposure to the technology sector and a higher standard deviation. Overall, VT has provided lower returns than SCHB over the past 10 years.
In this article, we’ll compare VT vs. SCHB. We’ll look at annual returns and fund composition, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VT’s and SCHB’s performance, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Total World Stock Index Fund ETF Shares||Schwab U.S. Broad Market ETF|
The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
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%.
VT’s dividend yield is 0.26% higher than that of SCHB (1.65% vs. 1.39%). Also, VT yielded on average 4.02% less per year over the past decade (10.42% vs. 14.43%). The expense ratio of VT is 0.05 percentage points higher than SCHB’s (0.08% vs. 0.03%).
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The Vanguard Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
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%.
VT is 4.52% less exposed to the Technology sector than SCHB (19.63% vs 24.15%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 1.48% higher and 0.42% higher respectively (15.36% vs. 13.88% and 12.32% vs. 11.9%). In total, Energy, Real Estate, and Basic Materials also make up 3.28% more of the fund’s holdings compared to SCHB (12.09% vs. 8.81%).
|Facebook Inc Class A||1.1%|
|Alphabet Inc Class A||0.97%|
|Alphabet Inc Class C||0.95%|
|JPMorgan Chase & Co||0.62%|
|Tencent Holdings Ltd||0.6%|
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
|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%.
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The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Standard Deviation of 14.19 with a Sharpe Ratio of 0.71 and a R-squared of 99.35. Its Alpha is 0.2 while VT’s Treynor Ratio is 9.5. Furthermore, the fund has a Beta of 1.01 and a Mean Return of 0.9.
The Schwab U.S. Broad Market ETF (SCHB) has a Treynor Ratio of 13.58 with a R-squared of 99.33 and a Mean Return of 1.23. Its Standard Deviation is 14.12 while SCHB’s Alpha is -0.58. Furthermore, the fund has a Beta of 1.04 and a Sharpe Ratio of 1.
VT’s Mean Return is 0.33 points lower than that of SCHB and its R-squared is 0.02 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than SCHB. The Alpha and Beta of VT are 0.78 points higher and 0.03 points lower than SCHB’s Alpha and Beta.
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VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% 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 VT would have resulted in a final balance of $24,537. This is a profit of $14,537 over 10 years and amounts to a compound annual growth rate (CAGR) of 10.42%.
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%.
VT’s CAGR is 4.02 percentage points lower than that of SCHB and as a result, would have yielded $11,817 less on a $10,000 investment. Thus, VT performed worse than SCHB by 4.02% annually.
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