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ITOT vs. SCHA: What’s The Difference?

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

The expense ratio of ITOT is 0.01 percentage points lower than SCHA’s (0.03% vs. 0.04%). ITOT also has a higher exposure to the technology sector and a lower standard deviation. Overall, ITOT has provided higher returns than SCHA over the past ten years.

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

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Summary

ITOTSCHA
NameiShares Core S&P Total U.S. Stock Market ETFSchwab U.S. Small-Cap ETF
CategoryLarge BlendSmall Blend
IssueriSharesSchwab ETFs
AUM41.97B16.51B
Avg. Return14.59%12.62%
Div. Yield1.2%0.98%
Expense Ratio0.03%0.04%

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.

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%.

ITOT’s dividend yield is 0.22% higher than that of SCHA (1.2% vs. 0.98%). Also, ITOT yielded on average 1.97% more per year over the past decade (14.59% vs. 12.62%). The expense ratio of ITOT is 0.01 percentage points lower than SCHA’s (0.03% vs. 0.04%).

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Fund Composition

Industry Exposure

ITOT vs. SCHA - Industry Exposure

ITOTSCHA
Technology24.49%14.91%
Industrials9.21%15.37%
Energy2.51%3.35%
Communication Services10.54%3.5%
Utilities2.35%1.83%
Healthcare13.59%16.5%
Consumer Defensive5.79%3.75%
Real Estate3.67%7.83%
Financial Services13.69%14.49%
Consumer Cyclical11.69%14.48%
Basic Materials2.47%3.98%

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.

ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.

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%.

ITOT is 9.58% more exposed to the Technology sector than SCHA (24.49% vs 14.91%). ITOT’s exposure to Financial Services and Healthcare stocks is 0.80% lower and 2.91% lower respectively (13.69% vs. 14.49% and 13.59% vs. 16.5%). In total, Basic Materials, Energy, and Real Estate also make up 6.51% less of the fund’s holdings compared to SCHA (8.65% vs. 15.16%).

Holdings

ITOT - Holdings

ITOT HoldingsWeight
Apple Inc5.07%
Microsoft Corp4.75%
Amazon.com Inc3.16%
Facebook Inc Class A1.89%
Alphabet Inc Class A1.79%
Alphabet Inc Class C1.71%
Tesla Inc1.17%
Berkshire Hathaway Inc Class B1.17%
NVIDIA Corp1.08%
JPMorgan Chase & Co1.02%

ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.

Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.

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

ITOTSCHA
Mean Return1.271.14
R-squared99.482.26
Std. Deviation14.0218.68
Alpha-0.54-4.65
Beta1.031.25
Sharpe Ratio1.040.7
Treynor Ratio14.139.62

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Alpha of -0.54 with a R-squared of 99.4 and a Mean Return of 1.27. Its Beta is 1.03 while ITOT’s Sharpe Ratio is 1.04. Furthermore, the fund has a Treynor Ratio of 14.13 and a Standard Deviation of 14.02.

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

ITOT’s Mean Return is 0.13 points higher than that of SCHA and its R-squared is 17.14 points higher. With a Standard Deviation of 14.02, ITOT is slightly less volatile than SCHA. The Alpha and Beta of ITOT are 4.11 points higher and 0.22 points lower than SCHA’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. SCHA - Annual Returns

YearITOTSCHA
202020.75%19.35%
201930.87%26.54%
2018-5.27%-11.75%
201721.23%15.04%
201612.59%19.88%
20150.96%-4.24%
201413.01%6.53%
201332.67%39.59%
201215.98%18.24%
20111.55%-2.95%
201016.15%28.31%

ITOT had its best year in 2013 with an annual return of 32.67%. ITOT’s worst year over the past decade yielded -5.27% and occurred in 2018. In most years the iShares Core S&P Total U.S. Stock Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.01%, 15.98%, and 16.15% 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

ITOT vs. SCHA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$36,42714.59%
SCHA$10,000$30,03512.62%

A $10,000 investment in ITOT would have resulted in a final balance of $36,427. This is a profit of $26,427 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.59%.

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%.

ITOT’s CAGR is 1.97 percentage points higher than that of SCHA and as a result, would have yielded $6,392 more on a $10,000 investment. Thus, ITOT outperformed SCHA by 1.97% annually.


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