The Vanguard Growth Index Fund ETF Shares (VUG) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between VUG and SCHP? And which fund is better?
The expense ratio of VUG is 0.01 percentage points lower than SCHP’s (0.04% vs. 0.05%). VUG also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, VUG has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare VUG vs. SCHP. We’ll look at annual returns and fund composition, as well as at their performance and holdings. Moreover, I’ll also discuss VUG’s and SCHP’s industry exposure, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Schwab U.S. TIPS ETF|
|Category||Large Growth||Inflation-Protected Bond|
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
VUG’s dividend yield is 1.40% lower than that of SCHP (0.57% vs. 1.97%). Also, VUG yielded on average 13.66% more per year over the past decade (17.58% vs. 3.92%). The expense ratio of VUG is 0.01 percentage points lower than SCHP’s (0.04% vs. 0.05%).
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|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%.
|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Beta of 1.04 with a Treynor Ratio of 16.13 and a Standard Deviation of 14.76. Its Mean Return is 1.44 while VUG’s R-squared is 92.48. Furthermore, the fund has a Alpha of 1.81 and a Sharpe Ratio of 1.13.
The Schwab U.S. TIPS ETF (SCHP) has a Mean Return of 0.28 with a Sharpe Ratio of 0.64 and a Treynor Ratio of 2.31. Its R-squared is 66.16 while SCHP’s Standard Deviation is 4.32. Furthermore, the fund has a Alpha of -0.5 and a Beta of 1.17.
VUG’s Mean Return is 1.16 points higher than that of SCHP and its R-squared is 26.32 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than SCHP. The Alpha and Beta of VUG are 2.31 points higher and 0.13 points lower than SCHP’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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% 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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
VUG’s CAGR is 13.66 percentage points higher than that of SCHP and as a result, would have yielded $32,320 more on a $10,000 investment. Thus, VUG outperformed SCHP by 13.66% annually.
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