VUG vs. SCHD: What’s The Difference?

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

The expense ratio of VUG is 0.02 percentage points lower than SCHD’s (0.04% vs. 0.06%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than SCHD over the past ten years.

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

Summary

VUG SCHD
Name Vanguard Growth Index Fund ETF Shares Schwab U.S. Dividend Equity ETF
Category Large Growth Large Value
Issuer Vanguard Schwab ETFs
AUM 165.53B 26B
Avg. Return 17.58% 14.80%
Div. Yield 0.57% 2.89%
Expense Ratio 0.04% 0.06%

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. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

VUG’s dividend yield is 2.32% lower than that of SCHD (0.57% vs. 2.89%). Also, VUG yielded on average 2.78% more per year over the past decade (17.58% vs. 14.80%). The expense ratio of VUG is 0.02 percentage points lower than SCHD’s (0.04% vs. 0.06%).

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Fund Composition

Industry Exposure

VUG vs. SCHD - Industry Exposure

VUG SCHD
Technology 39.05% 16.26%
Industrials 5.13% 18.05%
Energy 0.32% 1.87%
Communication Services 16.49% 4.96%
Utilities 0.0% 0.0%
Healthcare 8.09% 12.64%
Consumer Defensive 2.41% 14.04%
Real Estate 2.46% 0.0%
Financial Services 6.75% 21.69%
Consumer Cyclical 17.78% 8.36%
Basic Materials 1.52% 2.13%

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. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

VUG is 22.79% more exposed to the Technology sector than SCHD (39.05% vs 16.26%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 9.42% higher and 11.53% higher respectively (17.78% vs. 8.36% and 16.49% vs. 4.96%). In total, Energy, Basic Materials, and Consumer Defensive also make up 13.79% less of the fund’s holdings compared to SCHD (4.25% vs. 18.04%).

Holdings

VUG - Holdings

VUG Holdings Weight
Apple Inc 10.13%
Microsoft Corp 9.52%
Amazon.com Inc 6.88%
Facebook Inc Class A 3.89%
Alphabet Inc Class A 3.43%
Alphabet Inc Class C 3.22%
Tesla Inc 2.44%
NVIDIA Corp 2.21%
Visa Inc Class A 1.78%
PayPal Holdings Inc 1.6%

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%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

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Risk Analysis

VUG SCHD
Mean Return 1.44 0
R-squared 92.48 0
Std. Deviation 14.76 0
Alpha 1.81 0
Beta 1.04 0
Sharpe Ratio 1.13 0
Treynor Ratio 16.13 0

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

The Schwab U.S. Dividend Equity ETF (SCHD) has a Standard Deviation of 0 with a Beta of 0 and a Alpha of 0. Its Treynor Ratio is 0 while SCHD’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.

VUG’s Mean Return is 1.44 points higher than that of SCHD and its R-squared is 92.48 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than SCHD. The Alpha and Beta of VUG are 1.81 points higher and 1.04 points higher than SCHD’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. SCHD - Annual Returns

Year VUG SCHD
2020 40.16% 15.11%
2019 37.26% 27.28%
2018 -3.32% -5.46%
2017 27.8% 20.88%
2016 6.13% 16.25%
2015 3.32% -0.21%
2014 13.62% 11.66%
2013 32.38% 32.9%
2012 17.03% 11.4%
2011 1.87% 0.0%
2010 17.11% 0.0%

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 SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.

Portfolio Growth

VUG vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $39,204 17.58%
SCHD $10,000 $28,823 14.80%

A $10,000 investment in VUG would have resulted in a final balance of $39,204. This is a profit of $29,204 over 8 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.

VUG’s CAGR is 2.78 percentage points higher than that of SCHD and as a result, would have yielded $10,381 more on a $10,000 investment. Thus, VUG outperformed SCHD by 2.78% annually.


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