VUG vs SCHD

Vanguard Growth ETF (VUG) and Schwab U.S. Dividend Equity ETF (SCHD) are two popular exchange-traded funds (ETFs) that investors often compare. Both funds have a similar investment objective, but there are notable differences between them that investors should consider before investing in one or the other.

VUG vs SCHD: One of the key differences between VUG and SCHD is their investment strategy. VUG invests in large-cap growth stocks, while SCHD invests in large-cap dividend-paying stocks. As a result, VUG has a higher exposure to the technology sector and a higher standard deviation, while SCHD has a higher dividend yield and a lower standard deviation.

Another difference between VUG and SCHD is their expense ratio. VUG has a lower expense ratio of 0.04%, while SCHD has an expense ratio of 0.06%. While this may seem like a small difference, it can add up over time and impact an investor’s returns. Therefore, investors should consider the expense ratio when choosing between VUG and SCHD.

Overview of VUG vs SCHD

Vanguard Large Growth Fund (VUG) and Schwab ETFs Large Value Fund (SCHD) are two popular exchange-traded funds (ETFs) with different investment strategies. VUG invests in large-cap growth stocks, while SCHD invests in large-cap value stocks.

Table Overview of Vug vs SCHD

VUGSCHD
Investment StrategyLarge-cap growth stocksLarge-cap value stocks
Expense Ratio0.04%0.06%
Top HoldingsApple, Microsoft, AmazonJohnson & Johnson, Procter & Gamble, Coca-Cola
Yield1.12%2.99%

VUG has a higher exposure to the technology sector, with top holdings in Apple, Microsoft, and Amazon. SCHD, on the other hand, has a higher exposure to consumer staples and healthcare sectors, with top holdings in Johnson & Johnson, Procter & Gamble, and Coca-Cola.

Another difference between the two ETFs is their expense ratio. VUG has a lower expense ratio of 0.04%, while SCHD has an expense ratio of 0.06%. This means that VUG is slightly cheaper to own than SCHD.

Investors looking for income may prefer SCHD, which has a higher yield of 2.99%, compared to VUG’s yield of 1.12%. However, investors looking for growth may prefer VUG, which has a higher standard deviation and has historically outperformed SCHD in terms of total return.

Overall, both VUG and SCHD are popular ETFs with different investment strategies and expense ratios. Investors should carefully consider their investment goals and risk tolerance before choosing one over the other.

Investment Objectives and Strategies

VUG Investment Objectives and Strategies

VUG is an exchange-traded fund (ETF) that seeks to track the performance of the CRSP US Large Cap Growth Index, which includes large-cap US stocks that have higher growth potential than the broader market.

The fund invests in companies that have strong growth prospects and high earnings growth rates, with a focus on the technology sector. VUG’s investment objective is to provide long-term capital appreciation by investing in stocks of large-cap US companies with growth characteristics.

The fund’s investment strategy is to use a passive management approach, which means that it seeks to replicate the performance of the index by investing in the same securities in the same proportion as the index.

SCHD Investment Objectives and Strategies

SCHD is an ETF that seeks to track the performance of the Dow Jones US Dividend 100 Index, which includes high-quality US stocks that have a history of paying dividends.

The fund invests in companies that have a consistent track record of paying dividends and have the potential to continue paying them in the future. SCHD’s investment objective is to provide income and capital appreciation by investing in US companies that pay dividends.

The fund’s investment strategy is to use a passive management approach, which means that it seeks to replicate the performance of the index by investing in the same securities in the same proportion as the index. Both VUG and SCHD have a similar investment strategy of passive management, which means that they seek to replicate the performance of their respective indices by investing in the same securities in the same proportion as the index.

Their investment objectives and the types of companies they invest in are different. VUG focuses on large-cap US companies with growth characteristics, while SCHD invests in US companies that pay dividends.

Performance Comparison: VUG vs SCHD

When it comes to performance, both VUG and SCHD have a solid track record. However, there are some differences that investors should be aware of.

Over the past 5 years, VUG has outperformed SCHD with an average annual return of 22.01% compared to SCHD’s 17.3%. This is largely due to VUG’s higher exposure to the technology sector, which has been a top-performing sector in recent years.

On the other hand, SCHD has a higher dividend yield than VUG, which can be appealing to investors looking for income. As of the current date, SCHD’s dividend yield is 3.16% while VUG’s is 0.77%.

It’s important to note that past performance is not a guarantee of future results. Investors should consider their own investment goals and risk tolerance before making any investment decisions.

Here’s a quick breakdown of some key performance metrics:

MetricVUGSCHD
Expense Ratio0.04%0.06%
5-Year Average Annual Return22.01%17.3%
Dividend Yield0.77%3.16%

While VUG has a lower expense ratio than SCHD, SCHD’s higher dividend yield may make it a more attractive option for income-seeking investors. Ultimately, the choice between VUG and SCHD will depend on an investor’s individual goals and risk tolerance.

Risk and Volatility Comparison: VUG vs SCHD

When it comes to investing, risk and volatility are two important factors to consider. Risk refers to the possibility of losing money, while volatility refers to the degree of fluctuation in an investment’s value. In this section, we will compare the risk and volatility of VUG and SCHD. VUG has a higher standard deviation of 14.76 compared to SCHD’s standard deviation of 11.79.

This means that VUG is slightly more volatile than SCHD. However, VUG also has a higher alpha and beta than SCHD. Alpha measures an investment’s performance relative to a benchmark, while beta measures an investment’s sensitivity to market movements. Investors who are willing to take on more risk may find VUG to be a better option, as it has the potential for higher returns.

Investors who are more risk-averse may prefer SCHD, which offers a lower level of volatility. It’s important to note that both VUG and SCHD are exchange-traded funds (ETFs) that track different indexes. VUG tracks the CRSP US Large Cap Growth Index, which includes large-cap US growth stocks. SCHD, on the other hand, tracks the Dow Jones US Dividend 100 Index, which includes high dividend yielding US stocks.

When considering risk and volatility, it’s also important to diversify your portfolio. Investing in real estate through Fundrise is one way to add diversification to your portfolio.

This can help reduce overall risk and volatility. In summary, VUG and SCHD have different risk and volatility profiles. Investors should carefully consider their risk tolerance and investment goals before choosing between the two ETFs.

Fees and Expenses Comparison: VUG vs SCHD

One of the most important factors to consider when choosing between VUG and SCHD is the fees and expenses associated with each ETF. Both VUG and SCHD have relatively low expense ratios, but there are some differences to note.

VUG has an expense ratio of 0.04%, which is slightly lower than SCHD’s expense ratio of 0.06%. While this may seem like a small difference, over time, it can add up and impact your overall returns.

It’s also worth noting that VUG has a higher turnover rate than SCHD, which can lead to higher transaction costs. However, VUG’s higher exposure to the technology sector may make it a more attractive option for investors looking for growth potential.

When it comes to other fees, both VUG and SCHD have similar costs. For example, both ETFs charge a commission fee for buying and selling shares. Additionally, both ETFs have similar bid-ask spreads, which can impact the cost of buying and selling shares.

Overall, while both VUG and SCHD have relatively low fees and expenses, it’s important to consider the differences between the two. Investors should weigh the impact of the expense ratio, turnover rate, and other fees when deciding which ETF is the best fit for their investment goals.

Tax Efficiency Comparison: VUG vs SCHD

When it comes to tax efficiency, both VUG and SCHD are considered to be relatively tax-friendly investment options. However, there are some differences between the two funds in terms of their tax implications. One of the main differences between VUG and SCHD is their dividend yield.

SCHD is designed to provide investors with exposure to high-quality dividend-paying stocks, which means that it has a higher dividend yield than VUG. This can be beneficial for investors who are looking for a steady stream of income from their investments, but it can also have tax implications. Because SCHD has a higher dividend yield, it may be subject to higher taxes on those dividends.

The fund’s focus on high-quality dividend-paying stocks means that it may also be eligible for certain tax benefits, such as the qualified dividend tax rate. On the other hand, VUG is designed to provide investors with exposure to high-growth companies, which typically reinvest their profits back into the business rather than paying out dividends.

This means that VUG has a lower dividend yield than SCHD, which can be beneficial from a tax perspective. Another factor to consider when comparing the tax efficiency of VUG and SCHD is their expense ratios. VUG has a slightly higher expense ratio than SCHD, which means that investors may be paying more in fees over time.

Because VUG is designed to provide exposure to growth stocks, which typically have lower dividend yields, investors may still come out ahead in terms of taxes.

Also Read: VIG vs VUG

Both VUG and SCHD are relatively tax-friendly investment options, but there are some differences in their tax implications. Investors should carefully consider their individual tax situation and investment goals before choosing between the two funds.

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