VYM vs. SCHD: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between VYM and SCHD? And which fund is better?

VYM and SCHD have the same expense ratio: 0.06%. VYM also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VYM has provided lower returns than SCHD over the past ten years.

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

Summary

VYM SCHD
Name Vanguard High Dividend Yield Index Fund ETF Shares Schwab U.S. Dividend Equity ETF
Category Large Value Large Value
Issuer Vanguard Schwab ETFs
AUM 48.5B 26B
Avg. Return 12.20% 14.80%
Div. Yield 2.79% 2.89%
Expense Ratio 0.06% 0.06%

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. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

VYM’s dividend yield is 0.10% lower than that of SCHD (2.79% vs. 2.89%). Also, VYM yielded on average 2.60% less per year over the past decade (12.20% vs. 14.80%). VYM and SCHD have the same expense ratio: 0.06%.

Fund Composition

Industry Exposure

VYM vs. SCHD - Industry Exposure

VYM SCHD
Technology 9.77% 16.26%
Industrials 10.14% 18.05%
Energy 7.12% 1.87%
Communication Services 5.91% 4.96%
Utilities 7.27% 0.0%
Healthcare 13.61% 12.64%
Consumer Defensive 14.13% 14.04%
Real Estate 0.02% 0.0%
Financial Services 22.05% 21.69%
Consumer Cyclical 5.57% 8.36%
Basic Materials 4.41% 2.13%

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. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

VYM is 0.36% more exposed to the Financial Services sector than SCHD (22.05% vs 21.69%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 0.09% higher and 0.97% higher respectively (14.13% vs. 14.04% and 13.61% vs. 12.64%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 0.44% more of the fund’s holdings compared to SCHD (15.89% vs. 15.45%).

Holdings

VYM - Holdings

VYM Holdings Weight
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%
Intel Corp 1.71%
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%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

Risk Analysis

VYM SCHD
Mean Return 1.04 0
R-squared 88.88 0
Std. Deviation 12.69 0
Alpha -0.7 0
Beta 0.88 0
Sharpe Ratio 0.93 0
Treynor Ratio 13.24 0

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Standard Deviation of 12.69 with a Treynor Ratio of 13.24 and a Beta of 0.88. Its Mean Return is 1.04 while VYM’s Alpha is -0.7. Furthermore, the fund has a R-squared of 88.88 and a Sharpe Ratio of 0.93.

The Schwab U.S. Dividend Equity ETF (SCHD) has a Mean Return of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Beta is 0 while SCHD’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.

VYM’s Mean Return is 1.04 points higher than that of SCHD and its R-squared is 88.88 points higher. With a Standard Deviation of 12.69, VYM is slightly more volatile than SCHD. The Alpha and Beta of VYM are 0.70 points lower and 0.88 points higher than SCHD’s Alpha and Beta.

Performance

Annual Returns

VYM vs. SCHD - Annual Returns

Year VYM SCHD
2020 1.14% 15.11%
2019 24.2% 27.28%
2018 -5.87% -5.46%
2017 16.42% 20.88%
2016 16.87% 16.25%
2015 0.33% -0.21%
2014 13.47% 11.66%
2013 30.26% 32.9%
2012 12.68% 11.4%
2011 10.5% 0.0%
2010 14.17% 0.0%

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 SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.

Portfolio Growth

VYM vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $23,857 12.20%
SCHD $10,000 $28,823 14.80%

A $10,000 investment in VYM would have resulted in a final balance of $23,857. This is a profit of $13,857 over 8 years and amounts to a compound annual growth rate (CAGR) of 12.20%.

With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.

VYM’s CAGR is 2.60 percentage points lower than that of SCHD and as a result, would have yielded $4,966 less on a $10,000 investment. Thus, VYM performed worse than SCHD by 2.60% annually.


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