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VUG vs. SCHA: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VUG and SCHA? And which fund is better?

VUG and SCHA have the same expense ratio: 0.04%. VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than SCHA over the past ten years.

In this article, we’ll compare VUG vs. SCHA. We’ll look at portfolio growth and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss VUG’s and SCHA’s annual returns, industry exposure, and risk metrics and examine how these affect their overall returns.

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Summary

VUGSCHA
NameVanguard Growth Index Fund ETF SharesSchwab U.S. Small-Cap ETF
CategoryLarge GrowthSmall Blend
IssuerVanguardSchwab ETFs
AUM165.53B16.51B
Avg. Return17.58%12.62%
Div. Yield0.57%0.98%
Expense Ratio0.04%0.04%

The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.

The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

VUG’s dividend yield is 0.41% lower than that of SCHA (0.57% vs. 0.98%). Also, VUG yielded on average 4.96% more per year over the past decade (17.58% vs. 12.62%). VUG and SCHA have the same expense ratio: 0.04%.

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Fund Composition

Industry Exposure

VUG vs. SCHA - Industry Exposure

VUGSCHA
Technology39.05%14.91%
Industrials5.13%15.37%
Energy0.32%3.35%
Communication Services16.49%3.5%
Utilities0.0%1.83%
Healthcare8.09%16.5%
Consumer Defensive2.41%3.75%
Real Estate2.46%7.83%
Financial Services6.75%14.49%
Consumer Cyclical17.78%14.48%
Basic Materials1.52%3.98%

The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.

VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.

The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

VUG is 24.14% more exposed to the Technology sector than SCHA (39.05% vs 14.91%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 3.30% higher and 12.99% higher respectively (17.78% vs. 14.48% and 16.49% vs. 3.5%). In total, Energy, Basic Materials, and Consumer Defensive also make up 6.83% less of the fund’s holdings compared to SCHA (4.25% vs. 11.08%).

Holdings

VUG - Holdings

VUG HoldingsWeight
Apple Inc10.13%
Microsoft Corp9.52%
Amazon.com Inc6.88%
Facebook Inc Class A3.89%
Alphabet Inc Class A3.43%
Alphabet Inc Class C3.22%
Tesla Inc2.44%
NVIDIA Corp2.21%
Visa Inc Class A1.78%
PayPal Holdings Inc1.6%

VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.

Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.

SCHA - Holdings

SCHA HoldingsWeight
AMC Entertainment Holdings Inc Class A0.67%
Caesars Entertainment Inc0.51%
Cloudflare Inc0.48%
NovoCure Ltd0.45%
Plug Power Inc0.41%
10x Genomics Inc Ordinary Shares – Class A0.34%
GameStop Corp Class A0.28%
RH0.27%
Penn National Gaming Inc0.27%
Axon Enterprise Inc0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

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Risk Analysis

VUGSCHA
Mean Return1.441.14
R-squared92.4882.26
Std. Deviation14.7618.68
Alpha1.81-4.65
Beta1.041.25
Sharpe Ratio1.130.7
Treynor Ratio16.139.62

The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Treynor Ratio of 16.13 and a Mean Return of 1.44. Its Sharpe Ratio is 1.13 while VUG’s Alpha is 1.81. Furthermore, the fund has a Beta of 1.04 and a Standard Deviation of 14.76.

The Schwab U.S. Small-Cap ETF (SCHA) has a Treynor Ratio of 9.62 with a Alpha of -4.65 and a Sharpe Ratio of 0.7. Its Mean Return is 1.14 while SCHA’s R-squared is 82.26. Furthermore, the fund has a Beta of 1.25 and a Standard Deviation of 18.68.

VUG’s Mean Return is 0.30 points higher than that of SCHA and its R-squared is 10.22 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than SCHA. The Alpha and Beta of VUG are 6.46 points higher and 0.21 points lower than SCHA’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. SCHA - Annual Returns

YearVUGSCHA
202040.16%19.35%
201937.26%26.54%
2018-3.32%-11.75%
201727.8%15.04%
20166.13%19.88%
20153.32%-4.24%
201413.62%6.53%
201332.38%39.59%
201217.03%18.24%
20111.87%-2.95%
201017.11%28.31%

VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% respectively.

The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.

Portfolio Growth

VUG vs. SCHA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$46,73817.58%
SCHA$10,000$30,03512.62%

A $10,000 investment in VUG would have resulted in a final balance of $46,738. This is a profit of $36,738 over 10 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.

VUG’s CAGR is 4.96 percentage points higher than that of SCHA and as a result, would have yielded $16,703 more on a $10,000 investment. Thus, VUG outperformed SCHA by 4.96% annually.


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