IEFA vs. SCHF: What’s The Difference?

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

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

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

Summary

IEFA SCHF
Name iShares Core MSCI EAFE ETF Schwab International Equity ETF
Category Foreign Large Blend Foreign Large Blend
Issuer iShares Schwab ETFs
AUM 95.78B 26.99B
Avg. Return 5.79% 6.43%
Div. Yield 2.28% 2.16%
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 International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

IEFA’s dividend yield is 0.12% higher than that of SCHF (2.28% vs. 2.16%). Also, IEFA yielded on average 0.64% less per year over the past decade (5.79% vs. 6.43%). The expense ratio of IEFA is 0.01 percentage points higher than SCHF’s (0.07% vs. 0.06%).

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Fund Composition

Industry Exposure

IEFA vs. SCHF - Industry Exposure

IEFA SCHF
Technology 9.81% 11.55%
Industrials 16.32% 14.86%
Energy 3.19% 4.23%
Communication Services 5.53% 5.65%
Utilities 3.25% 3.09%
Healthcare 12.01% 11.05%
Consumer Defensive 9.78% 9.41%
Real Estate 4.31% 3.17%
Financial Services 15.91% 17.85%
Consumer Cyclical 11.96% 10.87%
Basic Materials 7.93% 8.26%

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 International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

IEFA is 1.46% more exposed to the Industrials sector than SCHF (16.32% vs 14.86%). IEFA’s exposure to Financial Services and Healthcare stocks is 1.94% lower and 0.96% higher respectively (15.91% vs. 17.85% and 12.01% vs. 11.05%). In total, Utilities, Real Estate, and Communication Services also make up 1.18% more of the fund’s holdings compared to SCHF (13.09% vs. 11.91%).

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%.

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

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Performance

Annual Returns

IEFA vs. SCHF - Annual Returns

Year IEFA SCHF
2020 8.55% 9.86%
2019 22.67% 22.15%
2018 -14.2% -14.39%
2017 26.42% 25.83%
2016 1.36% 2.88%
2015 0.53% -2.44%
2014 -4.82% -4.44%
2013 23.73% 20.03%
2012 0.0% 17.12%
2011 0.0% -12.32%
2010 0.0% 8.6%

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 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.

Portfolio Growth

IEFA vs. SCHF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
SCHF $10,000 $13,865 6.43%

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 SCHF, the end total would have been $13,865. This equates to a $3,865 profit over 7 years and a compound annual growth rate (CAGR) of 6.43%.

IEFA’s CAGR is 0.64 percentage points lower than that of SCHF and as a result, would have yielded $143 more on a $10,000 investment. Thus, IEFA performed worse than SCHF by 0.64% annually.


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