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Vanguard funds vs Schwab ETFs
Posted on 2/8/17 at 8:30 am
Posted on 2/8/17 at 8:30 am
I ran a little bit of an experiment last year. I had some money in some Vanguard funds and some money in Schwab ETFs. I don't have the vanguard fund tickers handy but the ETFs were SCHA, SCHE, SCHF, SCHH, SCHM, SCHX, SCHZ.
When it was all said and done last year, the vanguard account got a solid 9-10% return. The ETFs got a return closer to 20-21%.
I'm not an expert about ETFs/funds/etc. Is the main reason for this difference because ETFs are exposed to more volatility? I am assuming when the market goes down, the ETFs will fall faster in value than the funds. Is that correct?
When it was all said and done last year, the vanguard account got a solid 9-10% return. The ETFs got a return closer to 20-21%.
I'm not an expert about ETFs/funds/etc. Is the main reason for this difference because ETFs are exposed to more volatility? I am assuming when the market goes down, the ETFs will fall faster in value than the funds. Is that correct?
1
Posted on 2/8/17 at 10:48 am to notsince98
You have 1 year as a sample source, it's extremely unfair to base a decision based on that limited data.
However, to address your question more directly. There are still a number of questions to be answered that could impact the difference in reruns. Number of internal holdings? Equal weightings of the internal holdings? Inflows/outflows? Just because it's an ETF does not expose it to more volatility though.
Check both their beta's towards the S&P and that will answer that question.
However, to address your question more directly. There are still a number of questions to be answered that could impact the difference in reruns. Number of internal holdings? Equal weightings of the internal holdings? Inflows/outflows? Just because it's an ETF does not expose it to more volatility though.
Check both their beta's towards the S&P and that will answer that question.
Posted on 2/8/17 at 11:25 am to Shepherd88
quote:
You have 1 year as a sample source, it's extremely unfair to base a decision based on that limited data.
I'm not making a decision about anything. I'm just curious if this is typical when comparing funds vs ETFs.
My setup with vanguard funds had very similar exposure breakdown as the ETF portfolio. I expected them to be in the ballpark with only difference being the costs as ETFs are cheaper to own.
Posted on 2/8/17 at 11:54 am to notsince98
What do you mean by "funds"? An etf is a fund, but I'm assuming you meant like Targeted date funds? Targeted date funds own a certain amount of stocks and bonds correct? ETF's usually just own a certain sector of stocks.
So yes, without having more information I'd assuming the ETF's owned a larger amount of equities and the vaguard funds simply weren't invested in the stock market as highly.
So yes, without having more information I'd assuming the ETF's owned a larger amount of equities and the vaguard funds simply weren't invested in the stock market as highly.
Posted on 2/8/17 at 11:58 am to notsince98
We're gonna need the tickers the vanguard funds
Posted on 2/8/17 at 12:11 pm to notsince98
quote:
My setup with vanguard funds had very similar exposure breakdown as the ETF portfolio
With the big difference you reported in the returns of both, I doubt seriously that this statement is correct.
Posted on 2/8/17 at 1:18 pm to Shepherd88
quote:
We're gonna need the tickers the vanguard funds
VINIX
VSCIX
VTMNX
VBTIX
VITLX
Posted on 2/8/17 at 3:30 pm to notsince98
VSCIX 18.32% SCHA 19.97%
Those are both small cap, I'm not gonna take the time to go through everyone of the funds but these 2 are comparable. The returns aren't too far off and they are both in the small blend category but neither are invested in the exact same thing. The vanguard fund has a pretty equal weighting (.25%) exposure to each company. The Schwabb etf is pretty close to an equal weighting but has deviated in its top 5 holds (.30%+) to the rest of its holdings. That could simply be a rebalancing issue in that the 2 funds have different timing sequencing on when to rebalance.
The others will be likewise, however I also noticed on your Schwabb tickers you've only got 1 domestic large cap fund. The rest are small cap, mid cap, emerging markets, reits, bond market, and international large cap. Your vanguard funds are a total market index, target retirement date, total bond market, etc. so in the end you're not comparing apples to apples except for the detailed example I listed at the top.
Those are both small cap, I'm not gonna take the time to go through everyone of the funds but these 2 are comparable. The returns aren't too far off and they are both in the small blend category but neither are invested in the exact same thing. The vanguard fund has a pretty equal weighting (.25%) exposure to each company. The Schwabb etf is pretty close to an equal weighting but has deviated in its top 5 holds (.30%+) to the rest of its holdings. That could simply be a rebalancing issue in that the 2 funds have different timing sequencing on when to rebalance.
The others will be likewise, however I also noticed on your Schwabb tickers you've only got 1 domestic large cap fund. The rest are small cap, mid cap, emerging markets, reits, bond market, and international large cap. Your vanguard funds are a total market index, target retirement date, total bond market, etc. so in the end you're not comparing apples to apples except for the detailed example I listed at the top.
Posted on 2/8/17 at 9:12 pm to Shepherd88
Either way, if he had the exact same holdings in both places, Schwab would have a greater chance of outperforming. After their recent commission/OER cuts, they're the cheapest in the biz.
Posted on 2/9/17 at 7:34 am to notsince98
Yeah, you aren't comparing apples to apples as said. The funds just are not tracking the same sectors.
I own some SCHA and VB which are the small cap funds for schwab and Vanguard, and compare them. They are very close, not worth fighting over. One year one may outperform the other and the next year the other will.
I own some SCHA and VB which are the small cap funds for schwab and Vanguard, and compare them. They are very close, not worth fighting over. One year one may outperform the other and the next year the other will.
Posted on 2/9/17 at 8:58 am to LSUDeadboy
quote:
Either way, if he had the exact same holdings in both places, Schwab would have a greater chance of outperforming. After their recent commission/OER cuts, they're the cheapest in the biz.
This must be why my financial guy moved me from vanguard to schwab in my IRAs.
Posted on 2/9/17 at 1:27 pm to notsince98
quote:
This must be why my financial guy moved me from vanguard to schwab in my IRAs.
Doubtful, the difference between schwab fees and vanguard fees is under 0.2% at worst I'd guess. It may be as little as 0.05%. Over 20 years that adds up a little possibly, but pretty doubtful. Vanguard fees are one of the lowest fees in the business too.
Posted on 2/10/17 at 7:14 am to LSUDeadboy
quote:
After their recent commission/OER cuts, they're the cheapest in the biz.
Maybe, but only marginally.
VIGAX has been on an absolute tear for me and is only .08% not too shabby.
VTSAX has also done very well (total market) and is at .05%
Yes, some ETFs are cheaper that some mutual funds, but you can't (with vanguard anyway) set it on autopilot to buy weekly and buy fractional shares with ETFs
Posted on 2/15/17 at 3:27 pm to TigerDeBaiter
Schwab has some index funds, that have almost no expenses on them (swppx. swssx). I intend to start moving my money there, if the damn stock market will slow down a little, and let me in.
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