The Vanguard Value Index Fund ETF Shares (VTV) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VTV and SCHP? And which fund is better?
The expense ratio of VTV is 0.01 percentage points lower than SCHP’s (0.04% vs. 0.05%). VTV also has a high exposure to the financial services sector while SCHP is mostly comprised of AAA bonds. Overall, VTV has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare VTV vs. SCHP. We’ll look at portfolio growth and holdings, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VTV’s and SCHP’s performance, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||Schwab U.S. TIPS ETF|
|Category||Large Value||Inflation-Protected Bond|
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% 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%.
VTV’s dividend yield is 0.18% higher than that of SCHP (2.15% vs. 1.97%). Also, VTV yielded on average 8.16% more per year over the past decade (12.07% vs. 3.92%). The expense ratio of VTV is 0.01 percentage points lower than SCHP’s (0.04% vs. 0.05%).
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
|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.
The Vanguard Value Index Fund ETF Shares (VTV) has a R-squared of 92.61 with a Sharpe Ratio of 0.87 and a Standard Deviation of 13.78. Its Mean Return is 1.05 while VTV’s Beta is 0.98. Furthermore, the fund has a Treynor Ratio of 11.94 and a Alpha of -1.92.
The Schwab U.S. TIPS ETF (SCHP) has a Alpha of -0.5 with a Sharpe Ratio of 0.64 and a Treynor Ratio of 2.31. Its Beta is 1.17 while SCHP’s Mean Return is 0.28. Furthermore, the fund has a R-squared of 66.16 and a Standard Deviation of 4.32.
VTV’s Mean Return is 0.77 points higher than that of SCHP and its R-squared is 26.45 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than SCHP. The Alpha and Beta of VTV are 1.42 points lower and 0.19 points lower than SCHP’s Alpha and Beta.
VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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 VTV would have resulted in a final balance of $28,976. This is a profit of $18,976 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
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%.
VTV’s CAGR is 8.16 percentage points higher than that of SCHP and as a result, would have yielded $14,558 more on a $10,000 investment. Thus, VTV outperformed SCHP by 8.16% annually.
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