The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VTI and SCHP? And which fund is better?
The expense ratio of VTI is 0.02 percentage points lower than SCHP’s (0.03% vs. 0.05%). VTI also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare VTI vs. SCHP. We’ll look at portfolio growth and fund composition, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VTI’s and SCHP’s annual returns, holdings, and performance and examine how these affect their overall returns.
|Name||Vanguard Total Stock Market Index Fund ETF Shares||Schwab U.S. TIPS ETF|
|Category||Large Blend||Inflation-Protected Bond|
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
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%.
VTI’s dividend yield is 0.71% lower than that of SCHP (1.26% vs. 1.97%). Also, VTI yielded on average 10.78% more per year over the past decade (14.70% vs. 3.92%). The expense ratio of VTI is 0.02 percentage points lower than SCHP’s (0.03% vs. 0.05%).
|Facebook Inc Class A||1.88%|
|Alphabet Inc Class A||1.66%|
|Alphabet Inc Class C||1.56%|
|Berkshire Hathaway Inc Class B||1.09%|
|JPMorgan Chase & Co||1.06%|
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
|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.
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% 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 VTI would have resulted in a final balance of $36,370. This is a profit of $26,370 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
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%.
VTI’s CAGR is 10.78 percentage points higher than that of SCHP and as a result, would have yielded $21,952 more on a $10,000 investment. Thus, VTI outperformed SCHP by 10.78% annually.
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