Small-Cap Showdown: How Vanguard's VB Compares to Schwab's SCHA on Fees, Risk, and Diversification

This examination looks astatine 2 of the astir fashionable small-cap scale ETFs, each offering wide vulnerability to U.S. smaller companies.

The Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) and the Vanguard Small-Cap ETF (NYSEMKT:VB) some incorporate a diversified enactment of U.S. small-cap stocks, but they disagree connected size, hazard profile, and assemblage tilts, giving investors a fewer notable trade-offs to consider.

Beta measures terms volatility comparative to the S&P 500. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

SCHA is somewhat much affordable connected fees with a little disbursal ratio, portion VB offers a marginally higher dividend yield. Both figures are truthful close, though, that astir investors apt won’t announcement a meaningful quality betwixt the 2 funds.

VB tracks the CRSP US Small Cap Index, providing vulnerability to 1,324 holdings. The portfolio is well-diversified, with the largest assemblage weights successful industrials (making up 19% of assets), exertion (18%), and fiscal services (13%).

Its apical positions see Rocket Companies, Sandisk, and Ciena. Each banal represents little than 1% of assets, which helps bounds single-stock risk.

SCHA, by contrast, leans much connected fiscal services (17%), exertion (17%), and healthcare (16%). It holds a broader handbasket of 1,740 stocks, with its largest positions being Sandisk, Lumentum, and Rocket Companies. Like VB, each of its holdings makes up little than 1% of full assets.

Neither money uses leverage, currency hedging, oregon environmental, social, and governance (ESG) screens, truthful some stay plain-vanilla small-cap scale options.

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Both VB and SCHA incorporate a well-diversified premix of small-cap stocks. Neither is importantly tilted toward immoderate 1 industry, though they bash disagree successful their apical sectors. Investors seeking much vulnerability to industrials whitethorn similar VB, portion those much focused connected fiscal services and healthcare mightiness opt for SCHA.

Historically, SCHA has been somewhat much volatile than VB, with a higher beta and marginally deeper max drawdown — indicating much important terms fluctuations. It outperformed VB implicit the past 12 months, but its full returns implicit the past 5 years person fallen somewhat beneath VB’s.