The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between VYM and SCHA? And which fund is better?
The expense ratio of VYM is 0.02 percentage points higher than SCHA’s (0.06% vs. 0.04%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than SCHA over the past ten years.
In this article, we’ll compare VYM vs. SCHA. We’ll look at risk metrics and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VYM’s and SCHA’s performance, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Schwab U.S. Small-Cap ETF|
|Category||Large Value||Small Blend|
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
VYM’s dividend yield is 1.81% higher than that of SCHA (2.79% vs. 0.98%). Also, VYM yielded on average 0.43% less per year over the past decade (12.20% vs. 12.62%). The expense ratio of VYM is 0.02 percentage points higher than SCHA’s (0.06% vs. 0.04%).
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.
VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.
The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
VYM is 7.56% more exposed to the Financial Services sector than SCHA (22.05% vs 14.49%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 10.38% higher and 2.89% lower respectively (14.13% vs. 3.75% and 13.61% vs. 16.5%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 6.07% less of the fund’s holdings compared to SCHA (15.89% vs. 21.96%).
|JPMorgan Chase & Co||3.53%|
|Johnson & Johnson||3.28%|
|The Home Depot Inc||2.59%|
|Procter & Gamble Co||2.48%|
|Bank of America Corp||2.35%|
|Exxon Mobil Corp||2.02%|
|Comcast Corp Class A||1.96%|
|Verizon Communications Inc||1.75%|
|Cisco Systems Inc||1.69%|
VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.
Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|Penn National Gaming Inc||0.27%|
|Axon Enterprise Inc||0.27%|
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Standard Deviation of 12.69 with a Alpha of -0.7 and a Beta of 0.88. Its R-squared is 88.88 while VYM’s Mean Return is 1.04. Furthermore, the fund has a Sharpe Ratio of 0.93 and a Treynor Ratio of 13.24.
The Schwab U.S. Small-Cap ETF (SCHA) has a R-squared of 82.26 with a Sharpe Ratio of 0.7 and a Alpha of -4.65. Its Mean Return is 1.14 while SCHA’s Treynor Ratio is 9.62. Furthermore, the fund has a Standard Deviation of 18.68 and a Beta of 1.25.
VYM’s Mean Return is 0.10 points lower than that of SCHA and its R-squared is 6.62 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than SCHA. The Alpha and Beta of VYM are 3.95 points higher and 0.37 points lower than SCHA’s Alpha and Beta.
VYM had its best year in 2013 with an annual return of 30.26%. VYM’s worst year over the past decade yielded -5.87% and occurred in 2018. In most years the Vanguard High Dividend Yield Index Fund ETF Shares provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 12.68%, 13.47%, and 14.17% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VYM would have resulted in a final balance of $29,705. This is a profit of $19,705 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.20%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
VYM’s CAGR is 0.43 percentage points lower than that of SCHA and as a result, would have yielded $330 less on a $10,000 investment. Thus, VYM performed worse than SCHA by 0.43% annually.
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