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.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||Schwab U.S. Small-Cap ETF|
|Category||Short-Term Bond||Small Blend|
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%).
|IGSB Bond Sectors||Weight|
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.
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|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%.
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.
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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