Skip to content

VWO vs. SCHF: What’s The Difference?

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between VWO and SCHF? And which fund is better?

The expense ratio of VWO is 0.04 percentage points higher than SCHF’s (0.1% vs. 0.06%). VWO also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VWO has provided lower returns than SCHF over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VWOSCHF
NameVanguard FTSE Emerging Markets Index Fund ETF SharesSchwab International Equity ETF
CategoryDiversified Emerging MktsForeign Large Blend
IssuerVanguardSchwab ETFs
AUM117.28B26.99B
Avg. Return5.79%6.43%
Div. Yield1.98%2.16%
Expense Ratio0.1%0.06%

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% with an expense ratio of 0.1%.

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

VWO’s dividend yield is 0.18% lower than that of SCHF (1.98% vs. 2.16%). Also, VWO yielded on average 0.64% less per year over the past decade (5.79% vs. 6.43%). The expense ratio of VWO is 0.04 percentage points higher than SCHF’s (0.1% vs. 0.06%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VWO vs. SCHF - Industry Exposure

VWOSCHF
Technology17.06%11.55%
Industrials5.95%14.86%
Energy5.48%4.23%
Communication Services11.41%5.65%
Utilities2.55%3.09%
Healthcare5.33%11.05%
Consumer Defensive5.87%9.41%
Real Estate3.13%3.17%
Financial Services18.15%17.85%
Consumer Cyclical16.1%10.87%
Basic Materials8.98%8.26%

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has the most exposure to the Financial Services sector at 18.15%. This is followed by Technology and Consumer Cyclical at 17.06% and 16.1% respectively. Real Estate (3.13%), Healthcare (5.33%), and Energy (5.48%) only make up 13.94% of the fund’s total assets.

VWO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.87%, 5.95%, 8.98%, 11.41%, and 16.1%.

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

VWO is 0.30% more exposed to the Financial Services sector than SCHF (18.15% vs 17.85%). VWO’s exposure to Technology and Consumer Cyclical stocks is 5.51% higher and 5.23% higher respectively (17.06% vs. 11.55% and 16.1% vs. 10.87%). In total, Real Estate, Healthcare, and Energy also make up 4.51% less of the fund’s holdings compared to SCHF (13.94% vs. 18.45%).

Holdings

VWO - Holdings

VWO HoldingsWeight
Tencent Holdings Ltd5.29%
Alibaba Group Holding Ltd Ordinary Shares4.73%
Taiwan Semiconductor Manufacturing Co Ltd4.58%
Meituan1.88%
Taiwan Semiconductor Manufacturing Co Ltd ADR1.7%
Reliance Industries Ltd Shs Dematerialised1.06%
Naspers Ltd Class N1.01%
Vale SA0.92%
Infosys Ltd0.91%
China Construction Bank Corp Class H0.84%

VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.

Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.

SCHF - Holdings

SCHF HoldingsWeight
Nestle SA1.66%
Samsung Electronics Co Ltd1.6%
ASML Holding NV1.29%
Roche Holding AG1.24%
Toyota Motor Corp1.02%
LVMH Moet Hennessy Louis Vuitton SE0.93%
Novartis AG0.92%
Shopify Inc A0.78%
AstraZeneca PLC0.75%
SAP SE0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VWOSCHF
Mean Return0.450.58
R-squared81.6998.16
Std. Deviation17.6415.08
Alpha-1.360.53
Beta1.060.99
Sharpe Ratio0.270.42
Treynor Ratio3.145.39

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Treynor Ratio of 3.14 with a Mean Return of 0.45 and a Alpha of -1.36. Its R-squared is 81.69 while VWO’s Beta is 1.06. Furthermore, the fund has a Standard Deviation of 17.64 and a Sharpe Ratio of 0.27.

The Schwab International Equity ETF (SCHF) has a Alpha of 0.53 with a R-squared of 98.16 and a Beta of 0.99. Its Sharpe Ratio is 0.42 while SCHF’s Treynor Ratio is 5.39. Furthermore, the fund has a Standard Deviation of 15.08 and a Mean Return of 0.58.

VWO’s Mean Return is 0.13 points lower than that of SCHF and its R-squared is 16.47 points lower. With a Standard Deviation of 17.64, VWO is slightly more volatile than SCHF. The Alpha and Beta of VWO are 1.89 points lower and 0.07 points higher than SCHF’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VWO vs. SCHF - Annual Returns

YearVWOSCHF
202015.32%9.86%
201920.4%22.15%
2018-14.57%-14.39%
201731.38%25.83%
201611.75%2.88%
2015-15.35%-2.44%
20140.6%-4.44%
2013-5.0%20.03%
201218.84%17.12%
2011-18.68%-12.32%
201018.99%8.6%

VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% respectively.

The year 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.

Portfolio Growth

VWO vs. SCHF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VWO$10,000$13,6155.79%
SCHF$10,000$17,0896.43%

A $10,000 investment in VWO would have resulted in a final balance of $13,615. This is a profit of $3,615 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.

VWO’s CAGR is 0.64 percentage points lower than that of SCHF and as a result, would have yielded $3,474 less on a $10,000 investment. Thus, VWO performed worse than SCHF by 0.64% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.