SCHG vs. VUG: A Comparative Assessment

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The Vanguard Growth ETF (VUG) and the Schwab U.S. Large-Cap Growth ETF (SCHG) both target exposure to the large-cap growth segment of the U.S. equity market. While superficially similar, a granular examination reveals subtle divergences in construction and performance characteristics. This analysis provides a comparative assessment of these two ETFs, focusing on cost efficiency, historical performance, risk-adjusted returns, and underlying portfolio composition.

Key Metrics: A Snapshot

Metric VUG SCHG
Issuer Vanguard Schwab
Expense Ratio 0.04% 0.04%
1-Year Return (as of Jan. 15, 2026) 20.19% 17.88%
Dividend Yield 0.41% 0.36%
AUM $352 billion $53 billion
Beta (5Y Monthly) 1.21 1.17

Both ETFs exhibit comparable cost structures, with identical expense ratios. The marginal difference in dividend yield is inconsequential. The disparity in Assets Under Management (AUM) is noteworthy; VUG’s significantly larger AUM may contribute to greater liquidity and tighter bid-ask spreads, though this advantage is often minimal for broadly held ETFs.

Performance & Risk: A Historical Review

Metric VUG SCHG
Max Drawdown (5Y) -35.61% -34.59%
Growth of $1,000 over 5 Years $1,929 $2,036

Historical performance data indicates that SCHG has marginally outperformed VUG over the examined five-year period. However, this differential is not statistically significant and should not be extrapolated into future projections. The comparable maximum drawdown figures suggest similar levels of downside risk, although the higher beta of VUG implies a potentially greater sensitivity to market fluctuations.

Portfolio Composition: Dissecting the Holdings

SCHG comprises 198 companies, with a sector allocation weighted 45% towards Technology, 16% towards Communication Services, and 13% towards Consumer Cyclicals. Its top holdings include Nvidia, Apple, and Microsoft. VUG, holding 160 stocks, exhibits an even more pronounced tilt toward Technology (51%), followed by Communication Services and Consumer Cyclicals. The largest holdings are consistent with SCHG, but their relative weight within the portfolio is slightly greater.

The concentration of holdings in a few key names – particularly within the Technology sector – introduces a degree of single-stock risk. While diversification mitigates this risk to some extent, it remains a factor to consider, particularly given the potential for sector-specific headwinds. Neither fund employs leverage, currency hedging, or Environmental, Social, and Governance (ESG) screens, which may be relevant considerations for certain investors.

Implications for Investors

Both SCHG and VUG offer efficient access to the large-cap growth segment of the U.S. equity market. The primary distinction lies in their portfolio construction and resulting risk-return profiles. VUG’s narrower focus and higher concentration in Technology may appeal to investors with a bullish outlook on the sector, but also introduces a potentially elevated level of volatility. SCHG, with its broader diversification, may be more suitable for investors seeking a marginally more stable and balanced approach.

The choice between these two ETFs ultimately depends on individual investor preferences, risk tolerance, and portfolio objectives. A thorough understanding of the underlying holdings, sector allocations, and historical performance is essential for making an informed decision. The expense ratios are effectively identical, eliminating cost as a significant differentiating factor.

Glossary

  • ETF (Exchange-Traded Fund): A type of investment fund traded on stock exchanges.
  • Expense Ratio: The annual cost of owning an ETF, expressed as a percentage of assets.
  • Dividend Yield: The annual dividend payment divided by the current share price.
  • Growth Fund: A fund focused on companies expected to grow earnings faster than the market average.
  • Large-Cap: Companies with large market capitalizations.
  • Index: A benchmark used to measure the performance of a market segment.
  • Total Return: The overall return on an investment, including price appreciation and dividends.
  • 1-Year Return: The total return over a 12-month period.
  • Beta: A measure of an investment’s volatility relative to the market.
  • Max Drawdown: The largest peak-to-trough decline in an investment’s value.
  • AUM (Assets Under Management): The total value of assets managed by a fund.
  • Sector Weight: The percentage of a fund’s assets invested in a particular industry.

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2026-01-18 00:33