IWB vs. SCHA: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between IWB and SCHA? And which fund is better?

The expense ratio of IWB is 0.11 percentage points higher than SCHA’s (0.15% vs. 0.04%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided higher returns than SCHA over the past ten years.

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

Summary

IWB SCHA
Name iShares Russell 1000 ETF Schwab U.S. Small-Cap ETF
Category Large Blend Small Blend
Issuer iShares Schwab ETFs
AUM 30.54B 16.51B
Avg. Return 14.64% 12.62%
Div. Yield 1.14% 0.98%
Expense Ratio 0.15% 0.04%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

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%.

IWB’s dividend yield is 0.16% higher than that of SCHA (1.14% vs. 0.98%). Also, IWB yielded on average 2.01% more per year over the past decade (14.64% vs. 12.62%). The expense ratio of IWB is 0.11 percentage points higher than SCHA’s (0.15% vs. 0.04%).

Fund Composition

Industry Exposure

IWB vs. SCHA - Industry Exposure

IWB SCHA
Technology 25.33% 14.91%
Industrials 8.88% 15.37%
Energy 2.44% 3.35%
Communication Services 10.83% 3.5%
Utilities 2.36% 1.83%
Healthcare 13.35% 16.5%
Consumer Defensive 5.97% 3.75%
Real Estate 3.34% 7.83%
Financial Services 13.64% 14.49%
Consumer Cyclical 11.85% 14.48%
Basic Materials 2.02% 3.98%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

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%.

IWB is 10.42% more exposed to the Technology sector than SCHA (25.33% vs 14.91%). IWB’s exposure to Financial Services and Healthcare stocks is 0.85% lower and 3.15% lower respectively (13.64% vs. 14.49% and 13.35% vs. 16.5%). In total, Utilities, Energy, and Real Estate also make up 4.87% less of the fund’s holdings compared to SCHA (8.14% vs. 13.01%).

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

SCHA - Holdings

SCHA Holdings Weight
AMC Entertainment Holdings Inc Class A 0.67%
Caesars Entertainment Inc 0.51%
Cloudflare Inc 0.48%
NovoCure Ltd 0.45%
Plug Power Inc 0.41%
10x Genomics Inc Ordinary Shares – Class A 0.34%
GameStop Corp Class A 0.28%
RH 0.27%
Penn National Gaming Inc 0.27%
Axon Enterprise Inc 0.27%

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%.

Risk Analysis

IWB SCHA
Mean Return 1.27 1.14
R-squared 99.73 82.26
Std. Deviation 13.87 18.68
Alpha -0.38 -4.65
Beta 1.02 1.25
Sharpe Ratio 1.05 0.7
Treynor Ratio 14.31 9.62

The iShares Russell 1000 ETF (IWB) has a Standard Deviation of 13.87 with a Alpha of -0.38 and a R-squared of 99.73. Its Treynor Ratio is 14.31 while IWB’s Mean Return is 1.27. Furthermore, the fund has a Beta of 1.02 and a Sharpe Ratio of 1.05.

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

IWB’s Mean Return is 0.13 points higher than that of SCHA and its R-squared is 17.47 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than SCHA. The Alpha and Beta of IWB are 4.27 points higher and 0.23 points lower than SCHA’s Alpha and Beta.

Performance

Annual Returns

IWB vs. SCHA - Annual Returns

Year IWB SCHA
2020 20.8% 19.35%
2019 31.26% 26.54%
2018 -4.91% -11.75%
2017 21.53% 15.04%
2016 11.91% 19.88%
2015 0.82% -4.24%
2014 13.08% 6.53%
2013 32.93% 39.59%
2012 16.27% 18.24%
2011 1.36% -2.95%
2010 15.94% 28.31%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% 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

IWB vs. SCHA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $36,624 14.64%
SCHA $10,000 $30,035 12.62%

A $10,000 investment in IWB would have resulted in a final balance of $36,624. This is a profit of $26,624 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 2.01 percentage points higher than that of SCHA and as a result, would have yielded $6,589 more on a $10,000 investment. Thus, IWB outperformed SCHA by 2.01% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply