The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between ITOT and SCHD? And which fund is better?
The expense ratio of ITOT is 0.03 percentage points lower than SCHD’s (0.03% vs. 0.06%). ITOT also has a higher exposure to the technology sector and a higher standard deviation. Overall, ITOT has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare ITOT vs. SCHD. We’ll look at holdings and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss ITOT’s and SCHD’s performance, portfolio growth, and annual returns and examine how these affect their overall returns.
Summary
| ITOT | SCHD | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Schwab U.S. Dividend Equity ETF |
| Category | Large Blend | Large Value |
| Issuer | iShares | Schwab ETFs |
| AUM | 41.97B | 26B |
| Avg. Return | 14.59% | 14.80% |
| Div. Yield | 1.2% | 2.89% |
| Expense Ratio | 0.03% | 0.06% |
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. 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%.
ITOT’s dividend yield is 1.69% lower than that of SCHD (1.2% vs. 2.89%). Also, ITOT yielded on average 0.21% less per year over the past decade (14.59% vs. 14.80%). The expense ratio of ITOT is 0.03 percentage points lower than SCHD’s (0.03% vs. 0.06%).
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Fund Composition
Industry Exposure
| ITOT | SCHD | |
| Technology | 24.49% | 16.26% |
| Industrials | 9.21% | 18.05% |
| Energy | 2.51% | 1.87% |
| Communication Services | 10.54% | 4.96% |
| Utilities | 2.35% | 0.0% |
| Healthcare | 13.59% | 12.64% |
| Consumer Defensive | 5.79% | 14.04% |
| Real Estate | 3.67% | 0.0% |
| Financial Services | 13.69% | 21.69% |
| Consumer Cyclical | 11.69% | 8.36% |
| Basic Materials | 2.47% | 2.13% |
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. 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%.
ITOT is 8.23% more exposed to the Technology sector than SCHD (24.49% vs 16.26%). ITOT’s exposure to Financial Services and Healthcare stocks is 8.00% lower and 0.95% higher respectively (13.69% vs. 21.69% and 13.59% vs. 12.64%). In total, Basic Materials, Energy, and Real Estate also make up 4.65% more of the fund’s holdings compared to SCHD (8.65% vs. 4.00%).
Holdings
| ITOT Holdings | Weight |
| Apple Inc | 5.07% |
| Microsoft Corp | 4.75% |
| Amazon.com Inc | 3.16% |
| Facebook Inc Class A | 1.89% |
| Alphabet Inc Class A | 1.79% |
| Alphabet Inc Class C | 1.71% |
| Tesla Inc | 1.17% |
| Berkshire Hathaway Inc Class B | 1.17% |
| NVIDIA Corp | 1.08% |
| JPMorgan Chase & Co | 1.02% |
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%.
| 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
| ITOT | SCHD | |
| Mean Return | 1.27 | 0 |
| R-squared | 99.4 | 0 |
| Std. Deviation | 14.02 | 0 |
| Alpha | -0.54 | 0 |
| Beta | 1.03 | 0 |
| Sharpe Ratio | 1.04 | 0 |
| Treynor Ratio | 14.13 | 0 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Treynor Ratio of 14.13 with a R-squared of 99.4 and a Standard Deviation of 14.02. Its Alpha is -0.54 while ITOT’s Mean Return is 1.27. Furthermore, the fund has a Sharpe Ratio of 1.04 and a Beta of 1.03.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Mean Return of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while SCHD’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Alpha of 0.
ITOT’s Mean Return is 1.27 points higher than that of SCHD and its R-squared is 99.40 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than SCHD. The Alpha and Beta of ITOT are 0.54 points lower and 1.03 points higher than SCHD’s Alpha and Beta.
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Performance
Annual Returns
| Year | ITOT | SCHD |
| 2020 | 20.75% | 15.11% |
| 2019 | 30.87% | 27.28% |
| 2018 | -5.27% | -5.46% |
| 2017 | 21.23% | 20.88% |
| 2016 | 12.59% | 16.25% |
| 2015 | 0.96% | -0.21% |
| 2014 | 13.01% | 11.66% |
| 2013 | 32.67% | 32.9% |
| 2012 | 15.98% | 11.4% |
| 2011 | 1.55% | 0.0% |
| 2010 | 16.15% | 0.0% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $30,928 | 14.59% |
| SCHD | $10,000 | $28,823 | 14.80% |
A $10,000 investment in ITOT would have resulted in a final balance of $30,928. This is a profit of $20,928 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.59%.
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%.
ITOT’s CAGR is 0.21 percentage points lower than that of SCHD and as a result, would have yielded $2,105 more on a $10,000 investment. Thus, ITOT performed worse than SCHD by 0.21% annually.
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