VTI vs SCHG: A Comprehensive Comparison

VTI vs SCHG are two of the most popular ETFs in the market. Both offer investors exposure to the U.S. stock market, but they differ in their investment strategies and portfolio composition.

VTI, or the Vanguard Total Stock Market ETF, seeks to track the performance of the CRSP US Total Market Index. It invests in a diversified portfolio of U.S. stocks of all sizes, from small-cap to large-cap companies.

On the other hand, SCHG, or the Schwab U.S. Large-Cap Growth ETF, invests in U.S. large-cap growth companies that exhibit strong growth potential. Its portfolio is more concentrated than VTI, with a focus on technology, healthcare, and consumer discretionary sectors.

Key Takeaways

• VTI provides exposure to the entire U.S. stock market while SCHG focuses on large-cap growth companies.
• VTI has a more diversified portfolio than SCHG.
• Investors should consider factors such as performance, expense ratio, and management style when choosing between VTI and SCHG.

Overview

Understanding the differences between VTI and SCHG can help investors make informed decisions about which ETF is right for them.

Investors should consider various factors such as performance, expense ratio, and management style when choosing between VTI and SCHG.

While both ETFs have their own strengths and weaknesses, investors should choose the one that aligns with their investment goals, risk tolerance, and overall investment strategy.

In this section, we will provide an overview of VTI and SCHG. We will discuss what each ETF is, how they differ from each other, and their key features.

What is VTI?

VTI is an ETF that tracks the CRSP US Total Market Index. It is managed by Vanguard and is designed to provide investors with exposure to the total U.S. stock market.

VTI is a total stock market ETF, meaning it invests in a broad range of stocks across all sectors and market capitalizations. As of June 2023, VTI has over $1.5 trillion in net assets and a dividend yield of 1.4%.

What is SCHG?

SCHG is an ETF that tracks the performance of the large-cap growth sector of the U.S. equity market. It is managed by Charles Schwab and invests in large-cap companies that exhibit growth characteristics. As of June 2023, SCHG has over $30 billion in net assets and a dividend yield of 0.8%.

How are VTI and SCHG different?

VTI and SCHG differ in several key ways. Firstly, VTI is a total stock market ETF, while SCHG focuses on large-cap growth companies. Secondly, VTI has a lower expense ratio of 0.03% compared to SCHG’s 0.04%.

Thirdly, VTI has a broader portfolio with 3,500 holdings compared to SCHG’s 225 holdings. Finally, VTI has a higher exposure to the financial sector, while SCHG has a higher exposure to the technology sector.

Performance

VTI Performance

The Vanguard Total Stock Market ETF (VTI) seeks to track the performance of the CRSP US Total Market Index. The index is a market-cap-weighted index of over 3,500 stocks, representing nearly 100% of the U.S. equity market.

As of June 11, 2023, VTI has a year-to-date (YTD) return of 11.45%, a 1-year return of 21.87%, a 3-year return of 17.15%, and a 10-year return of 16.06%. The fund has an expense ratio of 0.03%.

SCHG Performance

The Schwab U.S. Large-Cap Growth ETF (SCHG) seeks to track the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.

The index is a float-adjusted market-cap-weighted index of U.S. large-cap growth stocks. As of June 11, 2023, SCHG has a YTD return of 12.87%, a 1-year return of 25.56%, a 3-year return of 21.58%, and a 10-year return of 18.62%. The fund has an expense ratio of 0.04%.

Comparison of VTI and SCHG Performance

Over the past 5 years, SCHG has outperformed VTI with a 5-year return of 13.73%, compared to VTI’s 5-year return of 13.56%. However, over the past year, VTI has slightly outperformed SCHG with a 1-year return of 21.87%, compared to SCHG’s 1-year return of 25.56% (Finny Score).

Both VTI and SCHG have significant holdings in growth stocks, including Apple, Microsoft, Amazon, and Tesla. However, SCHG has a higher concentration of growth stocks compared to VTI. SCHG also has a higher cost compared to VTI, with an expense ratio of 0.04% compared to VTI’s 0.03% (ETF.com).

VTI follows a passive (index-based) management style, while SCHG uses a sampling strategy to track the Dow Jones U.S. Large Cap Growth Total Stock Market Index (ETF.com).

Portfolio Composition

VTI Holdings

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a large blend ETF that tracks the performance of the CRSP US Total Market Index.

As of May 31, 2023, VTI has 3,576 holdings, with the top 10 holdings accounting for 22.3% of the fund’s assets.

The top holdings include Apple, Microsoft, Amazon, Alphabet, and Facebook, with the technology sector accounting for 27.3% of the fund’s assets. VTI also has exposure to other sectors such as healthcare, financials, and consumer services.

SCHG Holdings

The Schwab U.S. Large-Cap Growth ETF (SCHG) is a large growth ETF that seeks to track the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.

As of May 31, 2023, SCHG has 373 holdings, with the top 10 holdings accounting for 45.4% of the fund’s assets. The top holdings include NVIDIA, Amazon, Facebook, Alphabet, and Microsoft, with the technology sector accounting for 52.4% of the fund’s assets. SCHG also has exposure to other sectors such as healthcare, consumer discretionary, and industrials.

Comparison of VTI and SCHG Holdings

VTI and SCHG have different approaches to portfolio composition. VTI has a more diversified portfolio with a larger number of holdings, while SCHG has a more concentrated portfolio with a smaller number of holdings.

VTI has a higher exposure to value stocks, while SCHG has a higher exposure to growth stocks. The technology sector is the largest sector in both funds, but it accounts for a higher percentage of SCHG’s assets.

In terms of individual holdings, both VTI and SCHG have exposure to large-cap companies such as Amazon, Facebook, and Alphabet.

However, SCHG has a higher exposure to NVIDIA, a company that specializes in graphics processing units (GPUs) for the gaming and professional markets. NVIDIA has seen strong revenue growth in recent years, which has contributed to SCHG’s performance.

Expense Ratio and Management Style

VTI Expense Ratio and Management Style

VTI has an expense ratio of 0.03%, which is lower than the industry average of 0.44%. This means that investors pay only $3 for every $10,000 invested in the fund.

VTI is an index fund that tracks the CRSP US Total Market Index, which includes all the stocks listed on the NYSE, NASDAQ, and AMEX. The fund is passively managed, which means that it aims to replicate the performance of the index rather than beat it. The index is market-cap weighted, which means that larger companies have a greater impact on the fund’s performance.

SCHG Expense Ratio and Management Style

SCHG has an expense ratio of 0.04%, which is slightly higher than VTI’s expense ratio. The fund is actively managed and aims to provide exposure to U.S. large-cap growth stocks.

The fund’s management style is to identify companies with strong growth potential and invest in them with a long-term perspective. The fund’s top 10 holdings include well-known companies such as Apple, Microsoft, and Amazon.

Comparison of VTI and SCHG Expense Ratio and Management Style

VTI’s passive management style and low expense ratio make it a popular choice for investors who prioritize financial independence and diversification.

The fund aims to replicate the performance of the CRSP US Total Market Index, which includes small, mid, and large-cap companies. VTI’s top 10 holdings include companies such as Apple, Microsoft, and Amazon, but the fund is well-diversified across various sectors.

SCHG’s active management style and slightly higher expense ratio make it a suitable choice for investors who prioritize growth and momentum.

The fund aims to identify U.S. large-cap growth stocks with strong growth potential and invest in them with a long-term perspective. The fund’s top 10 holdings are heavily weighted towards the technology sector, which may increase the fund’s beta and standard deviation.

Index Tracking

When it comes to investing in ETFs, it is important to understand how they track their respective indexes. In this section, we will compare how VTI and SCHG track their respective indexes.

VTI Index Tracking

VTI, or the Vanguard Total Stock Market Index Fund ETF, aims to track the performance of the CRSP US Total Market Index, which includes large-, mid-, and small-cap stocks in the US equity market.

VTI uses a representative sampling technique, which means that it holds a diversified range of securities that closely resemble the index it tracks. This approach allows VTI to achieve a high level of correlation with the index while keeping costs low.

SCHG Index Tracking

SCHG, or the Schwab U.S. Large-Cap Growth ETF, aims to track the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, which includes large-cap US growth stocks in various sectors.

SCHG uses a full replication technique, which means that it holds all of the securities in the index in the same proportion as the index. This approach allows SCHG to achieve a high level of accuracy in tracking the index.

Comparison of VTI and SCHG Index Tracking

Both VTI and SCHG track their respective indexes using different techniques. While VTI uses a representative sampling technique, SCHG uses a full replication technique. As a result, VTI may not perfectly track the CRSP US Total Market Index, but it does so with a high degree of correlation while keeping costs low.

On the other hand, SCHG may perfectly track the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, but it may have higher costs associated with its full replication technique.

In terms of market exposure, VTI provides investors with exposure to the entire US equity market, while SCHG provides exposure to large-cap US growth stocks in various sectors.

VTI has a higher number of holdings than SCHG, which means that it is more diversified in terms of market capitalization and sectors. VTI has an average daily volume of 4.7 million shares and an expense ratio of 0.03%, while SCHG has an average daily volume of 1.3 million shares and an expense ratio of 0.04%.

Bottom Line: VTI vs SCHG

VTI is a well-diversified ETF that tracks the performance of the entire U.S. stock market. It has a low expense ratio of 0.03% and is ideal for long-term investors who want to invest in the U.S. stock market as a whole.

SCHG, on the other hand, focuses on large-cap growth stocks and has a higher expense ratio of 0.04%. It is ideal for investors who want to invest in companies with high growth potential and are willing to take on a bit more risk.

When choosing between VTI vs SCHG, it ultimately comes down to your investment goals and risk tolerance.

If you are a conservative investor who wants to invest in the entire U.S. stock market, VTI is the better option. If you are a more aggressive investor who wants to invest in high-growth companies, SCHG may be the better choice.

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Facts And Questions