IGSB vs. SCHP: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between IGSB and SCHP? And which fund is better?

The expense ratio of IGSB is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%). IGSB is mostly comprised of BBB bonds and SCHP has a high exposure to AAA bond. Overall, IGSB has provided lower returns than SCHP over the past 10 years.

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

Summary

IGSB SCHP
Name iShares 1-5 Year Investment Grade Corporate Bond ETF Schwab U.S. TIPS ETF
Category Short-Term Bond Inflation-Protected Bond
Issuer iShares Schwab ETFs
AUM 26.63B 18.41B
Avg. Return 2.51% 3.92%
Div. Yield 2.02% 1.97%
Expense Ratio 0.06% 0.05%

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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.

IGSB’s dividend yield is 0.05% higher than that of SCHP (2.02% vs. 1.97%). Also, IGSB yielded on average 1.41% less per year over the past decade (2.51% vs. 3.92%). The expense ratio of IGSB is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%).

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Fund Composition

Holdings

IGSB - 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.

SCHP - Holdings

SCHP Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Risk Analysis

IGSB SCHP
Mean Return 0.19 0.28
R-squared 26.13 66.16
Std. Deviation 2 4.32
Alpha 0.69 -0.5
Beta 0.34 1.17
Sharpe Ratio 0.82 0.64
Treynor Ratio 4.82 2.31

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a R-squared of 26.13 with a Alpha of 0.69 and a Mean Return of 0.19. Its Sharpe Ratio is 0.82 while IGSB’s Standard Deviation is 2. Furthermore, the fund has a Treynor Ratio of 4.82 and a Beta of 0.34.

The Schwab U.S. TIPS ETF (SCHP) has a Mean Return of 0.28 with a R-squared of 66.16 and a Beta of 1.17. Its Alpha is -0.5 while SCHP’s Standard Deviation is 4.32. Furthermore, the fund has a Sharpe Ratio of 0.64 and a Treynor Ratio of 2.31.

IGSB’s Mean Return is 0.09 points lower than that of SCHP and its R-squared is 40.03 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than SCHP. The Alpha and Beta of IGSB are 1.19 points higher and 0.83 points lower than SCHP’s Alpha and Beta.

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Performance

Annual Returns

IGSB vs. SCHP - Annual Returns

Year IGSB SCHP
2020 5.26% 10.94%
2019 7.01% 8.36%
2018 1.34% -1.31%
2017 1.41% 2.95%
2016 1.77% 4.6%
2015 0.7% -1.5%
2014 0.74% 3.56%
2013 1.03% -8.66%
2012 3.28% 6.83%
2011 1.34% 13.38%
2010 3.69% 0.0%

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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.

Portfolio Growth

IGSB vs. SCHP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IGSB $10,000 $12,637 2.51%
SCHP $10,000 $14,418 3.92%

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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.

IGSB’s CAGR is 1.41 percentage points lower than that of SCHP and as a result, would have yielded $1,781 less on a $10,000 investment. Thus, IGSB performed worse than SCHP by 1.41% annually.


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