IEFA vs. SCHD: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between IEFA and SCHD? And which fund is better?

The expense ratio of IEFA is 0.01 percentage points higher than SCHD’s (0.07% vs. 0.06%). IEFA also has a lower exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than SCHD over the past ten years.

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

Summary

IEFA SCHD
Name iShares Core MSCI EAFE ETF Schwab U.S. Dividend Equity ETF
Category Foreign Large Blend Large Value
Issuer iShares Schwab ETFs
AUM 95.78B 26B
Avg. Return 5.79% 14.80%
Div. Yield 2.28% 2.89%
Expense Ratio 0.07% 0.06%

The iShares Core MSCI EAFE ETF (IEFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 95.78B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.07%.

The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

IEFA’s dividend yield is 0.61% lower than that of SCHD (2.28% vs. 2.89%). Also, IEFA yielded on average 9.01% less per year over the past decade (5.79% vs. 14.80%). The expense ratio of IEFA is 0.01 percentage points higher than SCHD’s (0.07% vs. 0.06%).

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Fund Composition

Industry Exposure

IEFA vs. SCHD - Industry Exposure

IEFA SCHD
Technology 9.81% 16.26%
Industrials 16.32% 18.05%
Energy 3.19% 1.87%
Communication Services 5.53% 4.96%
Utilities 3.25% 0.0%
Healthcare 12.01% 12.64%
Consumer Defensive 9.78% 14.04%
Real Estate 4.31% 0.0%
Financial Services 15.91% 21.69%
Consumer Cyclical 11.96% 8.36%
Basic Materials 7.93% 2.13%

The iShares Core MSCI EAFE ETF (IEFA) has the most exposure to the Industrials sector at 16.32%. This is followed by Financial Services and Healthcare at 15.91% and 12.01% respectively. Utilities (3.25%), Real Estate (4.31%), and Communication Services (5.53%) only make up 13.09% of the fund’s total assets.

IEFA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Technology, Consumer Cyclical, and Healthcare stocks at 7.93%, 9.78%, 9.81%, 11.96%, and 12.01%.

The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

IEFA is 1.73% less exposed to the Industrials sector than SCHD (16.32% vs 18.05%). IEFA’s exposure to Financial Services and Healthcare stocks is 5.78% lower and 0.63% lower respectively (15.91% vs. 21.69% and 12.01% vs. 12.64%). In total, Utilities, Real Estate, and Communication Services also make up 8.13% more of the fund’s holdings compared to SCHD (13.09% vs. 4.96%).

Holdings

IEFA - Holdings

IEFA Holdings Weight
Nestle SA 1.77%
ASML Holding NV 1.43%
Roche Holding AG 1.31%
LVMH Moet Hennessy Louis Vuitton SE 1.08%
Novartis AG 1.0%
Toyota Motor Corp 0.92%
AstraZeneca PLC 0.78%
Unilever PLC 0.76%
AIA Group Ltd 0.74%
SAP SE 0.73%

IEFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 1.77%, 1.43%, 1.31%, 1.08%, and 1.0%.

Toyota Motor Corp (0.92%), AstraZeneca PLC (0.78%), and Unilever PLC (0.76%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the IEFA’s holdings at 0.74% and 0.73%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

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Performance

Annual Returns

IEFA vs. SCHD - Annual Returns

Year IEFA SCHD
2020 8.55% 15.11%
2019 22.67% 27.28%
2018 -14.2% -5.46%
2017 26.42% 20.88%
2016 1.36% 16.25%
2015 0.53% -0.21%
2014 -4.82% 11.66%
2013 23.73% 32.9%
2012 0.0% 11.4%
2011 0.0% 0.0%
2010 0.0% 0.0%

IEFA had its best year in 2017 with an annual return of 26.42%. IEFA’s worst year over the past decade yielded -14.2% and occurred in 2018. In most years the iShares Core MSCI EAFE ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 0.53%, and 1.36% respectively.

The year 2013 was the strongest year for SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.

Portfolio Growth

IEFA vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
SCHD $10,000 $21,688 14.80%

A $10,000 investment in IEFA would have resulted in a final balance of $14,008. This is a profit of $4,008 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

With a $10,000 investment in SCHD, the end total would have been $21,688. This equates to a $11,688 profit over 7 years and a compound annual growth rate (CAGR) of 14.80%.

IEFA’s CAGR is 9.01 percentage points lower than that of SCHD and as a result, would have yielded $7,680 less on a $10,000 investment. Thus, IEFA performed worse than SCHD by 9.01% annually.


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