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IJR vs. SCHA: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between IJR and SCHA? And which fund is better?

The expense ratio of IJR is 0.02 percentage points higher than SCHA’s (0.06% vs. 0.04%). IJR also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IJR has provided higher returns than SCHA over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IJRSCHA
NameiShares Core S&P Small-Cap ETFSchwab U.S. Small-Cap ETF
CategorySmall BlendSmall Blend
IssueriSharesSchwab ETFs
AUM68.64B16.51B
Avg. Return13.97%12.62%
Div. Yield0.96%0.98%
Expense Ratio0.06%0.04%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% 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%.

IJR’s dividend yield is 0.02% lower than that of SCHA (0.96% vs. 0.98%). Also, IJR yielded on average 1.34% more per year over the past decade (13.97% vs. 12.62%). The expense ratio of IJR is 0.02 percentage points higher than SCHA’s (0.06% vs. 0.04%).

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Fund Composition

Industry Exposure

IJR vs. SCHA - Industry Exposure

IJRSCHA
Technology14.32%14.91%
Industrials17.31%15.37%
Energy4.0%3.35%
Communication Services2.59%3.5%
Utilities1.8%1.83%
Healthcare11.55%16.5%
Consumer Defensive4.01%3.75%
Real Estate9.55%7.83%
Financial Services15.91%14.49%
Consumer Cyclical13.61%14.48%
Basic Materials5.34%3.98%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

IJR is 1.94% more exposed to the Industrials sector than SCHA (17.31% vs 15.37%). IJR’s exposure to Financial Services and Technology stocks is 1.42% higher and 0.59% lower respectively (15.91% vs. 14.49% and 14.32% vs. 14.91%). In total, Communication Services, Energy, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to SCHA (10.60% vs. 10.60%).

Holdings

IJR - Holdings

IJR HoldingsWeight
BlackRock Cash Funds Treasury SL Agency1.08%
GameStop Corp Class A0.86%
Omnicell Inc0.61%
Stamps.com Inc0.58%
Saia Inc0.57%
Power Integrations Inc0.57%
Exponent Inc0.54%
NeoGenomics Inc0.53%
Chart Industries Inc0.53%
Macy’s Inc0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

SCHA - Holdings

SCHA HoldingsWeight
AMC Entertainment Holdings Inc Class A0.67%
Caesars Entertainment Inc0.51%
Cloudflare Inc0.48%
NovoCure Ltd0.45%
Plug Power Inc0.41%
10x Genomics Inc Ordinary Shares – Class A0.34%
GameStop Corp Class A0.28%
RH0.27%
Penn National Gaming Inc0.27%
Axon Enterprise Inc0.27%

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%.

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Risk Analysis

IJRSCHA
Mean Return1.211.14
R-squared76.0382.26
Std. Deviation18.6818.68
Alpha-3.7-4.65
Beta1.21.25
Sharpe Ratio0.740.7
Treynor Ratio10.779.62

The iShares Core S&P Small-Cap ETF (IJR) has a Treynor Ratio of 10.77 with a Beta of 1.2 and a Sharpe Ratio of 0.74. Its R-squared is 76.03 while IJR’s Alpha is -3.7. Furthermore, the fund has a Standard Deviation of 18.68 and a Mean Return of 1.21.

The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a Sharpe Ratio of 0.7 and a Treynor Ratio of 9.62. Its Standard Deviation is 18.68 while SCHA’s Alpha is -4.65. Furthermore, the fund has a R-squared of 82.26 and a Beta of 1.25.

IJR’s Mean Return is 0.07 points higher than that of SCHA and its R-squared is 6.23 points lower. With a Standard Deviation of 18.68, IJR is slightly less volatile than SCHA. The Alpha and Beta of IJR are 0.95 points higher and 0.05 points lower than SCHA’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. SCHA - Annual Returns

YearIJRSCHA
202011.24%19.35%
201922.79%26.54%
2018-8.43%-11.75%
201713.2%15.04%
201626.49%19.88%
2015-2.0%-4.24%
20145.67%6.53%
201341.36%39.59%
201216.28%18.24%
20110.9%-2.95%
201026.14%28.31%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% 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

IJR vs. SCHA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$30,75913.97%
SCHA$10,000$30,03512.62%

A $10,000 investment in IJR would have resulted in a final balance of $30,759. This is a profit of $20,759 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

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%.

IJR’s CAGR is 1.34 percentage points higher than that of SCHA and as a result, would have yielded $724 more on a $10,000 investment. Thus, IJR outperformed SCHA by 1.34% annually.


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