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.
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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%).
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Fund Composition
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 | 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 | 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.
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Performance
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
| 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.
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