SCHG vs. VOO - Which is Best For You?
SCHG and VOO are popular core investment holdings, but there are key differences you must be aware of.
SCHG vs. VOO - Overview
What is SCHG?
SCHG is a passive ETF managed by Charles Schwab that seeks to reflect the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It invests in public equity markets of the United States, focusing on the stocks of large-cap companies under various sectors.
What is VOO?
On the other hand, VOO is a Vanguard managed fund that opts to replicate the performance of the S&P 500 Index as closely as possible. Just like SCHG, it invests in U.S. public equity markets, targeting a range of large-cap companies.
SCHG vs. VOO - Holdings Compared
SCHG holds around 250 companies, while VOO holds around 500.
SCHG primarily tracks growth stocks from the largest U.S. companies, while VOO tracks 500 large-cap companies across various sectors, thus providing more diversified exposure to the U.S. stock market.
Therefore, VOO is a better core investment option, while SCHG is best for investors looking for higher growth.
Performance Comparison of SCHG vs. VOO
In terms of performance, both funds have had solid returns over 3, 5, and 10-year periods. As a growth-oriented ETF, SCHG is expected to outperform in upward-trending and growing markets, as growth companies generally reinvest their earnings to achieve quicker expansion.
On the contrary, VOO might exhibit stronger resilience in cyclical downturns or bearish markets as it tracks the broader market and includes a mix of both growth and value companies. Therefore, its performance largely reflects the entire U.S. large-cap market conditions.
SCHG vs. VOO - Dividends Compared
VOO - 1.60%
SCHG - 0.42%
When it comes to dividends, both funds distribute income to investors.
However, the dividend yield of VOO at 1.60% is significantly higher than the SCHG’s 0.42%. VOO has a slight edge over SCHG for investors looking to generate consistent income.
SCHG vs. VOO: Expense Ratios
SCHG - 0.04%
VOO - 0.04%
Expense ratios are essential when assessing the cost-effectiveness of an ETF.
Both SCHG and VOO impressively share a low expense ratio of 0.04%. With such low expense ratios, they stand among the lowest-cost funds in the ETF marketplace.
SCHG vs. VOO - Volatility Comparison
Growth-oriented funds like SCHG tend to be more volatile than broader market funds like VOO.
Therefore, investors with a lower risk tolerance or short investment horizon might prefer VOO's relative stability.
The Verdict: SCHG or VOO?
The final question remains: which ETF is better, SCHG or VOO?
While we’ve highlighted key differentiators, the decision boils down to personal preference. If your investment strategy focuses on capital appreciation from growing markets, SCHG could be a great fit.
Conversely, VOO may be the better choice if you lean towards a strategy more geared towards capturing the full breadth of the market with an increased emphasis on dividend yield.
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