The Vanguard Growth Index Fund ETF Shares (VUG) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between VUG and SCHG? And which fund is better?
VUG and SCHG have the same expense ratio: 0.04%. VUG also has a lower exposure to the technology sector and a lower standard deviation. Overall, VUG has provided lower returns than SCHG over the past ten years.
In this article, we’ll compare VUG vs. SCHG. We’ll look at portfolio growth and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VUG’s and SCHG’s fund composition, industry exposure, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Schwab U.S. Large-Cap Growth ETF|
|Category||Large Growth||Large Growth|
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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
VUG’s dividend yield is 0.14% higher than that of SCHG (0.57% vs. 0.43%). Also, VUG yielded on average 0.23% less per year over the past decade (17.58% vs. 17.81%). VUG and SCHG have the same expense ratio: 0.04%.
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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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
VUG is 0.16% less exposed to the Technology sector than SCHG (39.05% vs 39.21%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 2.77% higher and 0.58% lower respectively (17.78% vs. 15.01% and 16.49% vs. 17.07%). In total, Energy, Basic Materials, and Consumer Defensive also make up 0.22% more of the fund’s holdings compared to SCHG (4.25% vs. 4.03%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|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%.
|Facebook Inc A||4.45%|
|Alphabet Inc A||3.93%|
|Alphabet Inc Class C||3.82%|
|Visa Inc Class A||2.12%|
|UnitedHealth Group Inc||2.02%|
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Standard Deviation of 14.76 and a Treynor Ratio of 16.13. Its R-squared is 92.48 while VUG’s Sharpe Ratio is 1.13. Furthermore, the fund has a Beta of 1.04 and a Mean Return of 1.44.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a Sharpe Ratio of 1.14 and a Beta of 1.05. Its Treynor Ratio is 16.3 while SCHG’s Alpha is 1.97. Furthermore, the fund has a Standard Deviation of 14.78 and a R-squared of 92.92.
VUG’s Mean Return is 0.02 points lower than that of SCHG and its R-squared is 0.44 points lower. With a Standard Deviation of 14.76, VUG is slightly less volatile than SCHG. The Alpha and Beta of VUG are 0.16 points lower and 0.01 points lower than SCHG’s Alpha and Beta.
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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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
VUG’s CAGR is 0.23 percentage points lower than that of SCHG and as a result, would have yielded $818 less on a $10,000 investment. Thus, VUG performed worse than SCHG by 0.23% annually.
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