IAU vs. SCHB: What’s The Difference?

The iShares Gold Trust (IAU) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. IAU is a iShares N/A fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between IAU and SCHB? And which fund is better?

The expense ratio of IAU is 0.22 percentage points higher than SCHB’s (0.25% vs. 0.03%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than SCHB over the past 10 years.

In this article, we’ll compare IAU vs. SCHB. We’ll look at annual returns and industry exposure, as well as at their portfolio growth and performance. Moreover, I’ll also discuss IAU’s and SCHB’s holdings, fund composition, and risk metrics and examine how these affect their overall returns.

Summary

IAU SCHB
Name iShares Gold Trust Schwab U.S. Broad Market ETF
Category N/A Large Blend
Issuer iShares Schwab ETFs
AUM 28.61B 21.44B
Avg. Return 6.03% 14.43%
Div. Yield 0.0% 1.39%
Expense Ratio 0.25% 0.03%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

IAU’s dividend yield is 1.39% lower than that of SCHB (0.0% vs. 1.39%). Also, IAU yielded on average 8.40% less per year over the past decade (6.03% vs. 14.43%). The expense ratio of IAU is 0.22 percentage points higher than SCHB’s (0.25% vs. 0.03%).

Fund Composition

Industry Exposure

IAU vs. SCHB - Industry Exposure

IAU SCHB
Technology 0.0% 24.15%
Industrials 0.0% 9.29%
Energy 0.0% 2.78%
Communication Services 0.0% 10.52%
Utilities 0.0% 2.32%
Healthcare 0.0% 13.37%
Consumer Defensive 0.0% 5.76%
Real Estate 0.0% 3.58%
Financial Services 0.0% 13.88%
Consumer Cyclical 0.0% 11.9%
Basic Materials 0.0% 2.45%

The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

IAU is 24.15% less exposed to the Technology sector than SCHB (0.0% vs 24.15%). IAU’s exposure to Industrials and Energy stocks is 9.29% lower and 2.78% lower respectively (0.0% vs. 9.29% and 0.0% vs. 2.78%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 29.36% less of the fund’s holdings compared to SCHB (0.00% vs. 29.36%).

Holdings

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

SCHB - Holdings

SCHB Holdings Weight
Apple Inc 4.86%
Microsoft Corp 4.61%
Amazon.com Inc 3.33%
Facebook Inc A 1.88%
Alphabet Inc A 1.66%
Alphabet Inc Class C 1.61%
Berkshire Hathaway Inc Class B 1.19%
Tesla Inc 1.18%
NVIDIA Corp 1.13%
JPMorgan Chase & Co 1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

Risk Analysis

IAU SCHB
Mean Return 0.23 1.23
R-squared 16.03 99.33
Std. Deviation 16.97 14.12
Alpha 4.16 -0.58
Beta 0.48 1.04
Sharpe Ratio 0.13 1
Treynor Ratio 1.5 13.58

The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a Beta of 0.48 and a Standard Deviation of 16.97. Its Treynor Ratio is 1.5 while IAU’s R-squared is 16.03. Furthermore, the fund has a Alpha of 4.16 and a Sharpe Ratio of 0.13.

The Schwab U.S. Broad Market ETF (SCHB) has a Treynor Ratio of 13.58 with a Mean Return of 1.23 and a Alpha of -0.58. Its Sharpe Ratio is 1 while SCHB’s Beta is 1.04. Furthermore, the fund has a Standard Deviation of 14.12 and a R-squared of 99.33.

IAU’s Mean Return is 1.00 points lower than that of SCHB and its R-squared is 83.30 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than SCHB. The Alpha and Beta of IAU are 4.74 points higher and 0.56 points lower than SCHB’s Alpha and Beta.

Performance

Annual Returns

IAU vs. SCHB - Annual Returns

Year IAU SCHB
2020 23.86% 20.77%
2019 18.54% 30.94%
2018 -1.39% -5.25%
2017 11.58% 21.18%
2016 8.85% 12.56%
2015 -11.65% 0.45%
2014 -0.44% 12.67%
2013 -27.96% 33.37%
2012 8.37% 16.22%
2011 8.66% 1.4%
2010 27.93% 17.1%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.

The year 2013 was the strongest year for SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.

Portfolio Growth

IAU vs. SCHB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $13,121 6.03%
SCHB $10,000 $36,354 14.43%

A $10,000 investment in IAU would have resulted in a final balance of $13,121. This is a profit of $3,121 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.

IAU’s CAGR is 8.40 percentage points lower than that of SCHB and as a result, would have yielded $23,233 less on a $10,000 investment. Thus, IAU performed worse than SCHB by 8.40% annually.


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