The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between IGSB and SCHA? And which fund is better?
The expense ratio of IGSB is 0.02 percentage points higher than SCHA’s (0.06% vs. 0.04%). IGSB is mostly comprised of BBB bonds while SCHA has a high exposure to the healthcare sector. Overall, IGSB has provided lower returns than SCHA over the past 10 years.
In this article, we’ll compare IGSB vs. SCHA. We’ll look at fund composition and annual returns, as well as at their industry exposure and performance. Moreover, I’ll also discuss IGSB’s and SCHA’s holdings, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| IGSB | SCHA | |
| Name | iShares 1-5 Year Investment Grade Corporate Bond ETF | Schwab U.S. Small-Cap ETF |
| Category | Short-Term Bond | Small Blend |
| Issuer | iShares | Schwab ETFs |
| AUM | 26.63B | 16.51B |
| Avg. Return | 2.51% | 12.62% |
| Div. Yield | 2.02% | 0.98% |
| Expense Ratio | 0.06% | 0.04% |
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
IGSB’s dividend yield is 1.04% higher than that of SCHA (2.02% vs. 0.98%). Also, IGSB yielded on average 10.12% less per year over the past decade (2.51% vs. 12.62%). The expense ratio of IGSB is 0.02 percentage points higher than SCHA’s (0.06% vs. 0.04%).
Fund Composition
Holdings
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.28% |
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
| SCHA Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 0.67% |
| Caesars Entertainment Inc | 0.51% |
| Cloudflare Inc | 0.48% |
| NovoCure Ltd | 0.45% |
| Plug Power Inc | 0.41% |
| 10x Genomics Inc Ordinary Shares – Class A | 0.34% |
| GameStop Corp Class A | 0.28% |
| RH | 0.27% |
| Penn National Gaming Inc | 0.27% |
| Axon Enterprise Inc | 0.27% |
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
Risk Analysis
| IGSB | SCHA | |
| Mean Return | 0.19 | 1.14 |
| R-squared | 26.13 | 82.26 |
| Std. Deviation | 2 | 18.68 |
| Alpha | 0.69 | -4.65 |
| Beta | 0.34 | 1.25 |
| Sharpe Ratio | 0.82 | 0.7 |
| Treynor Ratio | 4.82 | 9.62 |
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Mean Return of 0.19 with a Sharpe Ratio of 0.82 and a Beta of 0.34. Its Alpha is 0.69 while IGSB’s Treynor Ratio is 4.82. Furthermore, the fund has a R-squared of 26.13 and a Standard Deviation of 2.
The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a Treynor Ratio of 9.62 and a Sharpe Ratio of 0.7. Its Alpha is -4.65 while SCHA’s Beta is 1.25. Furthermore, the fund has a R-squared of 82.26 and a Standard Deviation of 18.68.
IGSB’s Mean Return is 0.95 points lower than that of SCHA and its R-squared is 56.13 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than SCHA. The Alpha and Beta of IGSB are 5.34 points higher and 0.91 points lower than SCHA’s Alpha and Beta.
Performance
Annual Returns
| Year | IGSB | SCHA |
| 2020 | 5.26% | 19.35% |
| 2019 | 7.01% | 26.54% |
| 2018 | 1.34% | -11.75% |
| 2017 | 1.41% | 15.04% |
| 2016 | 1.77% | 19.88% |
| 2015 | 0.7% | -4.24% |
| 2014 | 0.74% | 6.53% |
| 2013 | 1.03% | 39.59% |
| 2012 | 3.28% | 18.24% |
| 2011 | 1.34% | -2.95% |
| 2010 | 3.69% | 28.31% |
IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% respectively.
The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IGSB | $10,000 | $12,637 | 2.51% |
| SCHA | $10,000 | $30,035 | 12.62% |
A $10,000 investment in IGSB would have resulted in a final balance of $12,637. This is a profit of $2,637 over 10 years and amounts to a compound annual growth rate (CAGR) of 2.51%.
With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.
IGSB’s CAGR is 10.12 percentage points lower than that of SCHA and as a result, would have yielded $17,398 less on a $10,000 investment. Thus, IGSB performed worse than SCHA by 10.12% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
