SCHB vs. VTV: SCHB Targets Broad Market Reach, While VTV Focuses on Value

Vanguard Value ETF (NYSEMKT:VTV) and Schwab U.S. Broad Market ETF (NYSEMKT:SCHB) both keep costs minimal, but VTV leans into classic value stocks and higher yield, while SCHB captures the entire U.S. market with a notable technology tilt and more volatility.

Vanguard Value ETF focuses on large-cap U.S. value stocks, tracking the CRSP US Large Cap Value Index, while Schwab U.S. Broad Market ETF aims to mirror the total return of the U.S. broad stock market. This comparison looks at their differences in cost, performance, risk, and portfolio makeup to help investors find the right fit.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

Both funds are equally affordable with a rock-bottom 0.03% expense ratio, but VTV offers a higher yield at 2.0%, while SCHB yields 1.1%.

Performance & risk comparison

What's inside

SCHB seeks to mirror the total U.S. equity market, holding over 2,400 stocks and spanning all sectors, but with a significant technology bias (32% of assets). Its largest positions as of the latest reporting are Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT), and the fund has a track record of over 16 years. This broad approach means more exposure to high-growth tech, but also greater swings during market downturns, as reflected in its higher beta and deeper drawdown.

VTV, by contrast, concentrates on large-cap value names, with financials, healthcare, and industrials leading its allocations. Its top holdings include Berkshire Hathaway Inc (NYSE:BRKB), JPMorgan Chase & Co (NYSE:JPM), and Exxon Mobil Corp (NYSE:XOM). While it holds fewer companies than SCHB, its focus on established value stocks lends it lower volatility and a steadier yield, making it a potential fit for those who prioritize stability over maximum growth.

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What this means for investors

Exchange-traded funds (ETFs) can be a wonderful building block for most investment portfolios. Let’s have a look at two popular and very affordable ETFs, the Vanguard Value ETF (VTV) and Schwab U.S. Broad Market ETF (SCHB).

To start, let’s examine the VTV. This is a personal favorite of mine because of its low fees and overall structure. Starting with fees, you’ll be hard pressed to find a cheaper ETF. The fund’s expense ratio is 0.03%, meaning investors give up only $3 per year for every $10,000 invested in the fund. Second, the fund focuses on large-cap value stocks, which presents a welcome counterweight to many ETFs (including SCHB), which are loaded with big tech giants.

Speaking of SCHB, investors would be wise to consider this ETF, too. Granted, it is loaded with big tech names, but many of those stocks have outperformed for years. Second, it also boasts a tiny expense ratio of 0.03%, meaning investors pay very little in fees.

In summary, VTV is best for investors looking to deploy capital away from mega-cap stocks and into value stocks in sectors beyond technology. SCHB, on the other hand, will appeal to investors seeking a whole-of-market approach. As always, the final choice comes down to personal investment goals.

JPMorgan Chase is an advertising partner of Motley Fool Money. Jake Lerch has positions in ExxonMobil and Nvidia. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, JPMorgan Chase, Microsoft, Nvidia, and Vanguard Value ETF and is short shares of Apple. The Motley Fool has a disclosure policy.