SCHB vs VOO: Which One Should You Choose?

We Compare SCHB vs VOO:

We are going to explore the difference between Schwab U.S. Broad Market ETF (SCHB) vs Vanguard S&P 500 ETF (VOO)

Choosing between two funds can be difficult, but I will make it easy to decide between SCHB vs VOO.

 

SCHB vs VOO

The main difference between SCHB and VOO is the company that offers the ETF.  Charles Schwab offers SCHB, while Vanguard offers VOO.

They also track different indexes.  SCHB tracks the Dow Jones U.S. Broad Stock Market Index, while VOO tracks the S&P 500 Index.

Another significant difference is the number of stocks in each ETF.  VOO has 508 different companies in the index compared to 2,551 with SCHB.

Charles Schwab offers SCHB

Vanguard offers VOO

VOO and SCHB have the same expense ratio of 0.03%, making them both low-cost ETFs.

SCHB

• Fund Inception: 2009
• Offered By Charles Schwab
• Tracks Dow Jones U.S. Broad Stock Market Index
• Expense Ratio 0.03%
• Number Of Stocks: 2,551

VOO

• Fund Inception: 2010
• Offered By Vanguard
• Tracks the S&P 500 Index
• Expense Ratio 0.03%
• Holds 508 Stocks
• Equivalent Admiral Fund (VFIAX)
• Dividend Yield: 1.35%

 

SCHB vs VOO Performance

SCHB and VOO have had almost identical performance returns over the last 10 years, with VOO beating SCHB by 0.33%.

Here is how their performance compares:

Here is another comparison of short-term performance:

Again, as you can see, they have performed the same over the short and long term.

Similar performance returns occur because VOO and SCHB have many overlapping holdings.

 

SCHB vs VOO Holdings

There is a significant difference in the number of holdings for SCHB and VOO.  SCHB holds 2,551 stocks in the ETF, while VOO holds 508 stocks.

SCHB holds more companies compared to VOO.

Both funds have similar sector diversification.  SCHB is 29% technology which is the same as VOO.

Yet, SCHB has more diversification due to its 2,551 holdings compared to only 508 with VOO.

Here are SCHB and VOO holdings side-by-side:

The only difference between SCHB and VOO’s top 10 holdings is SCHB includes UnitedHealth Group while VOO has Johnson & Johnson.

 

SCHB vs VOO Overlap

There is an overlap between SCHB and VOO that includes 505 stocks.  Almost all the holdings in VOO are in SCHB.  But, only 21% of VOO’s holdings are in SCHB.

Here are SCHB and VOO holdings overlap:

This overlap means SCHB includes all the VOO holdings and many more.

SCHB has more diversification compared to VOO.

 

VOO and SCHB Differences

The main difference between VOO and SCHB is the company that offers the fund.  SCHB is provided by Schwab, while Vanguard provides VOO.

They also differ in the number of holdings.  VOO holds 508 stocks, while SCHB holds 2,551 stocks making it larger than VOO.

VOO provides more liquidity with $816 billion in net assets compared to $21 billion with SCHB.

By investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.

Differences between VOO and SCHB:

• Brokerage (VOO is Vanguard, SCHB is Schwab)
• Different Number Of Holdings (508 vs 2,551)
• Liquidity
• Tracking Index

 

SCHB Description

• Fund Inception: 2009
• Offered By Charles Schwab
• Tracks Dow Jones U.S. Broad Stock Market Index
• Expense Ratio 0.03%
• Number Of Stocks: 2551

The Schwab U.S. Broad Market ETF (SCHB) was launched in 2009 and tracks the Dow Jones US Broad Stock Market Index.

SCHB is passively managed to give investors broad exposure to the US equity market.  Equities include large, mid, and small-cap companies.

It has over $21 billion, making it one of the largest ETFs to track the total US equity market.

Large, mid, and small-cap companies provide more diversification.  More diversification translates into less risk for investors.

 

SCHB Performance

SCHB seeks to replicate the performance of the Dow Jones US Broad Stock Market Index.

It has resulted in excellent performance returns over the last 10 years:

In addition, the ETF gives access to over 2,500 of the most prominent publicly-traded companies in the United States.  It also provides diversification into all market capitalizations.

As you can see, SCHB has performed well since its inception in 2009.

The ETF has a beta of 1.00 and a standard deviation of 18.34% for the trailing three-year period.  This makes SCHB a medium-risk choice in its class.

The fund has roughly 2,551 holdings.

Schwab U.S. Broad Market ETF may be a good option for investors looking for total US market exposure.

These include expense ratio, expected asset class return, and momentum.

 

SCHB Costs

Cost is one of the many vital factors to consider in choosing an ETF.  To analyze the cost of an ETF, you should look at the expense ratio.

Cheaper funds tend to yield higher profits since they spend less on management.

SCHB is one of the cheapest exchange traded funds, with an expense ratio of 0.03%.

In other words, for a $10,000 investment, the ETF charges you $3 for annual operating expenses.

 

SCHB Holdings

The top 10 holdings for SCHB make up 23% of its total assets.

Schwab’s SCHB holds Apple, Microsoft, Amazon, Alphabet, Tesla, and over 2,000 other stocks.

If you are looking for a Schwab fund like SCHB, you can look at the Schwab Total Stock Market Index Fund (SWTSX).

 

No Minimum Investment

SCHB and VOO are exchange-traded funds (ETFs), so there is no minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance.

Usually, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  This is great for shares of VOO due to its high price per share.

There are two easy ways to invest in VOO or SCHB commission-free.

1. Vanguard to invest in VOO or Charles Schwab for SCHB
2. M1 Finance to invest in either VOO or SCHB.  (Use this link for $50 when you open a new account)

Both of these options are free.  This is important because fees can lower our returns.

M1 Finance is the best option because it allows you to purchase VOO, SCHB, and thousands of other stocks.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital’s free tools allow you to quickly find which of your investments has high fees so you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

VOO Description

• Fund Inception: 2010
• Expense Ratio: 0.03%
• Number Of Stocks: 508
• Top 10 Holdings: 30%
• Dividend Yield: 1.35%
• Equivalent Admiral Fund (VFIAX)

Vanguard S&P 500 ETF (VOO) is a very popular ETF that tracks the S&P 500 index.  VOO has over $816 billion in fund total net assets.

The fund invests in various sectors and has a low expense ratio.

 

VOO Performance

Vanguard’s VOO aims to have the same performance returns as the S&P 500 index.  Therefore, VOO and the S&P 500 should always overlap.

Here is VOO and the S&P 500 Index performance chart:

VOO (Blue)                S&P 500 (Yellow)

As you can see, VOO and the S&P 500 overlap in performance.

This should be an expectation in the future.

 

VOO Top 10 Holdings

VOO holds Apple, Microsoft, Alphabet, Amazon, Tesla, and over 500 other stocks.

 

Which Is Better SCHB or VOO?

SCHB and VOO are similar investments.  They have had the same performance over the last 10 years and have the same expense ratio of 0.03%.

SCHB offers more diversification and less volatility since it holds more stocks.

Which is better will likely depend on which brokerage you prefer to use.

Vanguard customers will likely prefer VOO.

Charles Schwab customers will probably choose SCHB.

That said, slight differences could make VOO better for some investors.

VOO offers more liquidity with $816 billion in net assets.

It’s important to consider costs and fees because they can cost you in the long run.  That’s why buying and selling your shares commission-free is essential.

Again a great way to do this is with M1 Finance.

You can purchase fractional shares for free, allowing you to buy VOO, SCHB, and thousands of other stocks/ETFs.

 

Is VOO or SCHB Better for Financial Independence?

VOO and SCHB have performed well enough to get you to Financial Independence Retire Early (FIRE).  In addition, they both have performed excellently over the last 10 years and have low expense ratios.

I usually lean towards the ETF with the lowest fees.  But, both VOO and SCHB have the same expense ratio of 0.03%.

Calculate Your FI Number With My Free FIRE Calculator

The next factor is diversification.  In this case, SCHB wins.

I’m a big fan of Vanguard and own VOO as a long-term investment.

Related Posts:

• VTI vs VOO
• SCHD vs SPHD
• SCHD vs DGRO
• VTSAX vs VTI
• SCHX vs VOO
• SCHB vs SCHX

 

My Winner: SCHB

My winner is SCHB, based on the higher diversification and lower volatility.

The decision might come down to which brokerage you prefer to use.

You can consider Vanguard’s equivalent to SCHB, which is VTI.

Both are low-cost ETFs.

Low fees are a guaranteed way to keep more money in your portfolio!

I would also suggest considering VOO’s Admiral fund VFIAX.