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VUG vs. SCHB: What’s The Difference?

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

The expense ratio of VUG is 0.01 percentage points higher than SCHB’s (0.04% vs. 0.03%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than SCHB over the past ten years.

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

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Summary

VUGSCHB
NameVanguard Growth Index Fund ETF SharesSchwab U.S. Broad Market ETF
CategoryLarge GrowthLarge Blend
IssuerVanguardSchwab ETFs
AUM165.53B21.44B
Avg. Return17.58%14.43%
Div. Yield0.57%1.39%
Expense Ratio0.04%0.03%

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. 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%.

VUG’s dividend yield is 0.82% lower than that of SCHB (0.57% vs. 1.39%). Also, VUG yielded on average 3.15% more per year over the past decade (17.58% vs. 14.43%). The expense ratio of VUG is 0.01 percentage points higher than SCHB’s (0.04% vs. 0.03%).

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Fund Composition

Industry Exposure

VUG vs. SCHB - Industry Exposure

VUGSCHB
Technology39.05%24.15%
Industrials5.13%9.29%
Energy0.32%2.78%
Communication Services16.49%10.52%
Utilities0.0%2.32%
Healthcare8.09%13.37%
Consumer Defensive2.41%5.76%
Real Estate2.46%3.58%
Financial Services6.75%13.88%
Consumer Cyclical17.78%11.9%
Basic Materials1.52%2.45%

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. 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%.

VUG is 14.90% more exposed to the Technology sector than SCHB (39.05% vs 24.15%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.88% higher and 5.97% higher respectively (17.78% vs. 11.9% and 16.49% vs. 10.52%). In total, Energy, Basic Materials, and Consumer Defensive also make up 6.74% less of the fund’s holdings compared to SCHB (4.25% vs. 10.99%).

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%.

SCHB - Holdings

SCHB HoldingsWeight
Apple Inc4.86%
Microsoft Corp4.61%
Amazon.com Inc3.33%
Facebook Inc A1.88%
Alphabet Inc A1.66%
Alphabet Inc Class C1.61%
Berkshire Hathaway Inc Class B1.19%
Tesla Inc1.18%
NVIDIA Corp1.13%
JPMorgan Chase & Co1.06%

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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Risk Analysis

VUGSCHB
Mean Return1.441.23
R-squared92.4899.33
Std. Deviation14.7614.12
Alpha1.81-0.58
Beta1.041.04
Sharpe Ratio1.131
Treynor Ratio16.1313.58

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

The Schwab U.S. Broad Market ETF (SCHB) has a Mean Return of 1.23 with a R-squared of 99.33 and a Beta of 1.04. Its Sharpe Ratio is 1 while SCHB’s Treynor Ratio is 13.58. Furthermore, the fund has a Standard Deviation of 14.12 and a Alpha of -0.58.

VUG’s Mean Return is 0.21 points higher than that of SCHB and its R-squared is 6.85 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than SCHB. The Alpha and Beta of VUG are 2.39 points higher and 0.00 points lower than SCHB’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. SCHB - Annual Returns

YearVUGSCHB
202040.16%20.77%
201937.26%30.94%
2018-3.32%-5.25%
201727.8%21.18%
20166.13%12.56%
20153.32%0.45%
201413.62%12.67%
201332.38%33.37%
201217.03%16.22%
20111.87%1.4%
201017.11%17.1%

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 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.

Portfolio Growth

VUG vs. SCHB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$46,73817.58%
SCHB$10,000$36,35414.43%

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 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%.

VUG’s CAGR is 3.15 percentage points higher than that of SCHB and as a result, would have yielded $10,384 more on a $10,000 investment. Thus, VUG outperformed SCHB by 3.15% annually.


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