SCHD vs VMBS
SCHD vs VMBS
Schwab US Dividend Equity ETF vs Vanguard Mortgage-Backed Securities ETF
Quick Verdict
VMBS has a lower expense ratio. SCHD delivered stronger 1-year returns. VMBS offers more diversification with 4688 holdings.
Side-by-Side Comparison
| Metric | SCHD | VMBS | Winner |
|---|---|---|---|
| Expense Ratio | 0.06% | 0.03% | |
| AUM | $103.7B | $15.6B | |
| Dividend Yield | 3.31% | 4.15% | |
| Holdings | 104 | 5,043 | |
| YTD Return | +22.69% | +0.01% | |
| 1Y Return | +30.94% | +4.32% | |
| 3Y Return (annualized) | +14.20% | +4.53% | |
| 5Y Return (annualized) | +9.59% | +0.22% | |
| Volatility (annualized) | 13.7% | 4.2% | |
| Max Drawdown | -33.4% | -18.4% | |
| Fund Family | Charles Schwab Asset Management | Vanguard (US) | |
| Category | Equity | Fixed Income | |
| Inception | Oct 20, 2011 | Nov 19, 2009 |
SCHD vs VMBS Performance
Schwab US Dividend Equity ETF (SCHD) is a ETF from Charles Schwab Asset Management and Vanguard Mortgage-Backed Securities ETF (VMBS) is a ETF from Vanguard (US). Over the past year SCHD returned +30.94% while VMBS returned +4.32%. Year to date, SCHD is up 22.69% versus a gain of 0.01% for VMBS.
Over three years, SCHD compounded at +14.20% per year against +4.53% for VMBS; over five years the annualized figures are +9.59% and +0.22% respectively. Across the full 15-year window we track, SCHD has the edge at +11.31% annualized vs +0.49%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
SCHD has been the more volatile fund, with annualized monthly volatility of 13.7% compared with 4.2% for VMBS. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -33.4% for SCHD and -18.4% for VMBS. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.28. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
SCHD charges 0.06% per year while VMBS charges 0.03%. On a $10,000 position that is $6 vs $3 annually, a gap of $3 per year that compounds over a long holding period. On income, SCHD currently yields 3.31% against 4.15% for VMBS.
Holdings Overlap
SCHD and VMBS share 0 holdings out of 4788 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, SCHD or VMBS?
SCHD has an expense ratio of 0.06% while VMBS charges 0.03%. VMBS is the cheaper option. On a $10,000 investment, that is $3 per year of difference.
Which performed better, SCHD or VMBS?
Over the past year SCHD returned +30.94% vs +4.32% for VMBS, so SCHD leads on 1-year performance. Over the longest common window we track (15 years), SCHD annualized +11.31% vs +0.49% for VMBS. Past performance does not guarantee future results.
Which is riskier, SCHD or VMBS?
SCHD has been the more volatile fund at 13.7% annualized versus 4.2% for VMBS. Worst drawdown: SCHD -33.4% vs VMBS -18.4%.
Should I hold both SCHD and VMBS?
SCHD and VMBS have a monthly-return correlation of 0.28, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between SCHD and VMBS?
SCHD and VMBS share 0 common holdings with a 0.0% weight overlap. Combined, they hold 4788 unique securities.
Which pays a higher dividend, SCHD or VMBS?
SCHD yields 3.31% while VMBS yields 4.15%, so VMBS currently pays the higher dividend yield.
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