VYM vs. SCHG: What’s The Difference?

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

The expense ratio of VYM is 0.02 percentage points higher than SCHG’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 SCHG over the past ten years.

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

Summary

VYM SCHG
Name Vanguard High Dividend Yield Index Fund ETF Shares Schwab U.S. Large-Cap Growth ETF
Category Large Value Large Growth
Issuer Vanguard Schwab ETFs
AUM 48.5B 15.16B
Avg. Return 12.20% 17.81%
Div. Yield 2.79% 0.43%
Expense Ratio 0.06% 0.04%

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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

VYM’s dividend yield is 2.36% higher than that of SCHG (2.79% vs. 0.43%). Also, VYM yielded on average 5.61% less per year over the past decade (12.20% vs. 17.81%). The expense ratio of VYM is 0.02 percentage points higher than SCHG’s (0.06% vs. 0.04%).

Fund Composition

Industry Exposure

VYM vs. SCHG - Industry Exposure

VYM SCHG
Technology 9.77% 39.21%
Industrials 10.14% 3.01%
Energy 7.12% 0.2%
Communication Services 5.91% 17.07%
Utilities 7.27% 0.0%
Healthcare 13.61% 12.05%
Consumer Defensive 14.13% 2.15%
Real Estate 0.02% 1.64%
Financial Services 22.05% 7.98%
Consumer Cyclical 5.57% 15.01%
Basic Materials 4.41% 1.68%

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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

VYM is 14.07% more exposed to the Financial Services sector than SCHG (22.05% vs 7.98%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 11.98% higher and 1.56% higher respectively (14.13% vs. 2.15% and 13.61% vs. 12.05%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 17.87% less of the fund’s holdings compared to SCHG (15.89% vs. 33.76%).

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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

Risk Analysis

VYM SCHG
Mean Return 1.04 1.46
R-squared 88.88 92.92
Std. Deviation 12.69 14.78
Alpha -0.7 1.97
Beta 0.88 1.05
Sharpe Ratio 0.93 1.14
Treynor Ratio 13.24 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a Treynor Ratio of 16.3 and a Alpha of 1.97. Its Sharpe Ratio is 1.14 while SCHG’s Standard Deviation is 14.78. Furthermore, the fund has a R-squared of 92.92 and a Beta of 1.05.

VYM’s Mean Return is 0.42 points lower than that of SCHG and its R-squared is 4.04 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than SCHG. The Alpha and Beta of VYM are 2.67 points lower and 0.17 points lower than SCHG’s Alpha and Beta.

Performance

Annual Returns

VYM vs. SCHG - Annual Returns

Year VYM SCHG
2020 1.14% 39.13%
2019 24.2% 36.21%
2018 -5.87% -1.35%
2017 16.42% 28.04%
2016 16.87% 6.76%
2015 0.33% 3.26%
2014 13.47% 15.74%
2013 30.26% 33.96%
2012 12.68% 17.02%
2011 10.5% -0.67%
2010 14.17% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

VYM vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $29,705 12.20%
SCHG $10,000 $47,556 17.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

VYM’s CAGR is 5.61 percentage points lower than that of SCHG and as a result, would have yielded $17,851 less on a $10,000 investment. Thus, VYM performed worse than SCHG by 5.61% annually.


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