IAU vs. SCHG: What’s The Difference?

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

The expense ratio of IAU is 0.21 percentage points higher than SCHG’s (0.25% vs. 0.04%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than SCHG over the past 10 years.

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

Summary

IAU SCHG
Name iShares Gold Trust Schwab U.S. Large-Cap Growth ETF
Category N/A Large Growth
Issuer iShares Schwab ETFs
AUM 28.61B 15.16B
Avg. Return 6.03% 17.81%
Div. Yield 0.0% 0.43%
Expense Ratio 0.25% 0.04%

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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

IAU’s dividend yield is 0.43% lower than that of SCHG (0.0% vs. 0.43%). Also, IAU yielded on average 11.78% less per year over the past decade (6.03% vs. 17.81%). The expense ratio of IAU is 0.21 percentage points higher than SCHG’s (0.25% vs. 0.04%).

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Fund Composition

Industry Exposure

IAU vs. SCHG - Industry Exposure

IAU SCHG
Technology 0.0% 39.21%
Industrials 0.0% 3.01%
Energy 0.0% 0.2%
Communication Services 0.0% 17.07%
Utilities 0.0% 0.0%
Healthcare 0.0% 12.05%
Consumer Defensive 0.0% 2.15%
Real Estate 0.0% 1.64%
Financial Services 0.0% 7.98%
Consumer Cyclical 0.0% 15.01%
Basic Materials 0.0% 1.68%

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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

IAU is 39.21% less exposed to the Technology sector than SCHG (0.0% vs 39.21%). IAU’s exposure to Industrials and Energy stocks is 3.01% lower and 0.20% lower respectively (0.0% vs. 3.01% and 0.0% vs. 0.2%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.63% less of the fund’s holdings compared to SCHG (0.00% vs. 24.63%).

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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

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Risk Analysis

IAU SCHG
Mean Return 0.23 1.46
R-squared 16.03 92.92
Std. Deviation 16.97 14.78
Alpha 4.16 1.97
Beta 0.48 1.05
Sharpe Ratio 0.13 1.14
Treynor Ratio 1.5 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Sharpe Ratio of 1.14 with a Alpha of 1.97 and a Standard Deviation of 14.78. Its Mean Return is 1.46 while SCHG’s Treynor Ratio is 16.3. Furthermore, the fund has a Beta of 1.05 and a R-squared of 92.92.

IAU’s Mean Return is 1.23 points lower than that of SCHG and its R-squared is 76.89 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than SCHG. The Alpha and Beta of IAU are 2.19 points higher and 0.57 points lower than SCHG’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. SCHG - Annual Returns

Year IAU SCHG
2020 23.86% 39.13%
2019 18.54% 36.21%
2018 -1.39% -1.35%
2017 11.58% 28.04%
2016 8.85% 6.76%
2015 -11.65% 3.26%
2014 -0.44% 15.74%
2013 -27.96% 33.96%
2012 8.37% 17.02%
2011 8.66% -0.67%
2010 27.93% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

IAU vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $13,121 6.03%
SCHG $10,000 $47,556 17.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

IAU’s CAGR is 11.78 percentage points lower than that of SCHG and as a result, would have yielded $34,435 less on a $10,000 investment. Thus, IAU performed worse than SCHG by 11.78% annually.


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