SCHI vs VCIT

SCHIASchwab 5-10 Year Corporate Bond ETF

VCITAVanguard Intermediate-Term Corporate Bond ETF

In short

SCHI The cheap middle of the corporate bond curve. SCHI holds roughly 2,300 investment-grade corporate bonds maturing in five to ten years, charges three basis points, and pays interest monthly.

VCIT Vanguard's corporate-bond workhorse: a broad basket of investment-grade company debt at three basis points, undercutting every other top-graded fund in its peer group. Running since 2009, paying monthly.

Stated mandate

SCHI The fund seeks to track, before fees and expenses, an index representing the intermediate-term U.S. corporate bond market.

VCIT The Fund seeks to track a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity.

Why people hold it

• SCHI 0.03% a year against a 0.19% median for investment-grade corporate bond funds. No peer in the group charges less.
• Follows the Bloomberg US 5-10 Year Corporate Bond Index closely, one of the tightest index implementations among intermediate corporate bond funds.schwabassetmanagement.com
• A multi-billion-dollar fund that trades actively, the kind of scale that usually comes with narrow bid-ask spreads.
• About 2,300 bonds spread across the investment-grade corporate market, with income paid monthly rather than quarterly.

• VCIT Charges 0.03% a year, roughly a sixth of the category's typical fee and a notch below the 0.04% carried by peers USIG, SPIB, IGIB and IGSB.
• Hugs its market-weighted corporate bond index closely, with index-matching among the tightest in its peer group. You get the market, not a manager's hunches.
• A multi-billion-dollar fund and one of the most actively traded in investment-grade corporate credit, which keeps spreads tight and large orders drama-free.
• Pays monthly, and the coupons come from pure corporate credit rather than a blend watered down with government paper.

Worth knowing

• SCHI Five-to-ten-year maturities carry real rate sensitivity. When yields move, these bonds swing harder than short-term paper and softer than long bonds.
• Corporate credit only. No Treasuries, no mortgages, and nothing outside the five-to-ten-year window, so it's a slice of the bond market rather than the whole thing.schwabassetmanagement.com
• VCIT, IGIB and SPIB run near-identical mandates at similar cost, so the choice often comes down to index details and where you already hold accounts.

• VCIT Intermediate maturities mean real rate sensitivity: when yields rise, share prices fall, and there is no maturity date to sit and wait for.
• All corporate borrowers, so downgrades and defaults are part of the deal in a way they are not for a Treasury fund.
• Market weighting sizes positions by debt outstanding, so the companies that borrow the most get the biggest slots.

Full SCHI profile⁠

Full VCIT profile⁠