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.
Summary
| VWO | SCHF | |
| Name | Vanguard FTSE Emerging Markets Index Fund ETF Shares | Schwab International Equity ETF |
| Category | Diversified Emerging Mkts | Foreign Large Blend |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 117.28B | 26.99B |
| Avg. Return | 5.79% | 6.43% |
| Div. Yield | 1.98% | 2.16% |
| Expense Ratio | 0.1% | 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%).
Fund Composition
Industry Exposure
| VWO | SCHF | |
| Technology | 17.06% | 11.55% |
| Industrials | 5.95% | 14.86% |
| Energy | 5.48% | 4.23% |
| Communication Services | 11.41% | 5.65% |
| Utilities | 2.55% | 3.09% |
| Healthcare | 5.33% | 11.05% |
| Consumer Defensive | 5.87% | 9.41% |
| Real Estate | 3.13% | 3.17% |
| Financial Services | 18.15% | 17.85% |
| Consumer Cyclical | 16.1% | 10.87% |
| Basic Materials | 8.98% | 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 | Weight |
| Tencent Holdings Ltd | 5.29% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.73% |
| Taiwan Semiconductor Manufacturing Co Ltd | 4.58% |
| Meituan | 1.88% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 1.7% |
| Reliance Industries Ltd Shs Dematerialised | 1.06% |
| Naspers Ltd Class N | 1.01% |
| Vale SA | 0.92% |
| Infosys Ltd | 0.91% |
| China Construction Bank Corp Class H | 0.84% |
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 | Weight |
| Nestle SA | 1.66% |
| Samsung Electronics Co Ltd | 1.6% |
| ASML Holding NV | 1.29% |
| Roche Holding AG | 1.24% |
| Toyota Motor Corp | 1.02% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.93% |
| Novartis AG | 0.92% |
| Shopify Inc A | 0.78% |
| AstraZeneca PLC | 0.75% |
| SAP SE | 0.74% |
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%.
Risk Analysis
| VWO | SCHF | |
| Mean Return | 0.45 | 0.58 |
| R-squared | 81.69 | 98.16 |
| Std. Deviation | 17.64 | 15.08 |
| Alpha | -1.36 | 0.53 |
| Beta | 1.06 | 0.99 |
| Sharpe Ratio | 0.27 | 0.42 |
| Treynor Ratio | 3.14 | 5.39 |
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.
Performance
Annual Returns
| Year | VWO | SCHF |
| 2020 | 15.32% | 9.86% |
| 2019 | 20.4% | 22.15% |
| 2018 | -14.57% | -14.39% |
| 2017 | 31.38% | 25.83% |
| 2016 | 11.75% | 2.88% |
| 2015 | -15.35% | -2.44% |
| 2014 | 0.6% | -4.44% |
| 2013 | -5.0% | 20.03% |
| 2012 | 18.84% | 17.12% |
| 2011 | -18.68% | -12.32% |
| 2010 | 18.99% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| VWO | $10,000 | $13,615 | 5.79% |
| SCHF | $10,000 | $17,089 | 6.43% |
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.
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