IJR vs. SCHD: What’s The Difference?

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

IJR and SCHD have the same expense ratio: 0.06%. IJR also has a lower exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than SCHD over the past ten years.

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

Summary

IJR SCHD
Name iShares Core S&P Small-Cap ETF Schwab U.S. Dividend Equity ETF
Category Small Blend Large Value
Issuer iShares Schwab ETFs
AUM 68.64B 26B
Avg. Return 13.97% 14.80%
Div. Yield 0.96% 2.89%
Expense Ratio 0.06% 0.06%

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. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

IJR’s dividend yield is 1.93% lower than that of SCHD (0.96% vs. 2.89%). Also, IJR yielded on average 0.83% less per year over the past decade (13.97% vs. 14.80%). IJR and SCHD have the same expense ratio: 0.06%.

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Fund Composition

Industry Exposure

IJR vs. SCHD - Industry Exposure

IJR SCHD
Technology 14.32% 16.26%
Industrials 17.31% 18.05%
Energy 4.0% 1.87%
Communication Services 2.59% 4.96%
Utilities 1.8% 0.0%
Healthcare 11.55% 12.64%
Consumer Defensive 4.01% 14.04%
Real Estate 9.55% 0.0%
Financial Services 15.91% 21.69%
Consumer Cyclical 13.61% 8.36%
Basic Materials 5.34% 2.13%

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. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

IJR is 0.74% less exposed to the Industrials sector than SCHD (17.31% vs 18.05%). IJR’s exposure to Financial Services and Technology stocks is 5.78% lower and 1.94% lower respectively (15.91% vs. 21.69% and 14.32% vs. 16.26%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.27% less of the fund’s holdings compared to SCHD (10.60% vs. 20.87%).

Holdings

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

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%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

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Risk Analysis

IJR SCHD
Mean Return 1.21 0
R-squared 76.03 0
Std. Deviation 18.68 0
Alpha -3.7 0
Beta 1.2 0
Sharpe Ratio 0.74 0
Treynor Ratio 10.77 0

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

The Schwab U.S. Dividend Equity ETF (SCHD) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a R-squared of 0. Its Alpha is 0 while SCHD’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Mean Return of 0.

IJR’s Mean Return is 1.21 points higher than that of SCHD and its R-squared is 76.03 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than SCHD. The Alpha and Beta of IJR are 3.70 points lower and 1.20 points higher than SCHD’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. SCHD - Annual Returns

Year IJR SCHD
2020 11.24% 15.11%
2019 22.79% 27.28%
2018 -8.43% -5.46%
2017 13.2% 20.88%
2016 26.49% 16.25%
2015 -2.0% -0.21%
2014 5.67% 11.66%
2013 41.36% 32.9%
2012 16.28% 11.4%
2011 0.9% 0.0%
2010 26.14% 0.0%

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 SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.

Portfolio Growth

IJR vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $26,217 13.97%
SCHD $10,000 $28,823 14.80%

A $10,000 investment in IJR would have resulted in a final balance of $26,217. This is a profit of $16,217 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.

IJR’s CAGR is 0.83 percentage points lower than that of SCHD and as a result, would have yielded $2,606 less on a $10,000 investment. Thus, IJR performed worse than SCHD by 0.83% annually.


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