The iShares Russell 1000 Value ETF (IWD) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between IWD and SCHA? And which fund is better?
The expense ratio of IWD is 0.15 percentage points higher than SCHA’s (0.19% vs. 0.04%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than SCHA over the past ten years.
In this article, we’ll compare IWD vs. SCHA. We’ll look at fund composition and holdings, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss IWD’s and SCHA’s annual returns, performance, and industry exposure and examine how these affect their overall returns.
Summary
| IWD | SCHA | |
| Name | iShares Russell 1000 Value ETF | Schwab U.S. Small-Cap ETF |
| Category | Large Value | Small Blend |
| Issuer | iShares | Schwab ETFs |
| AUM | 54.1B | 16.51B |
| Avg. Return | 11.40% | 12.62% |
| Div. Yield | 1.57% | 0.98% |
| Expense Ratio | 0.19% | 0.04% |
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
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%.
IWD’s dividend yield is 0.59% higher than that of SCHA (1.57% vs. 0.98%). Also, IWD yielded on average 1.22% less per year over the past decade (11.40% vs. 12.62%). The expense ratio of IWD is 0.15 percentage points higher than SCHA’s (0.19% vs. 0.04%).
Fund Composition
Industry Exposure
| IWD | SCHA | |
| Technology | 10.28% | 14.91% |
| Industrials | 11.77% | 15.37% |
| Energy | 4.76% | 3.35% |
| Communication Services | 8.67% | 3.5% |
| Utilities | 4.88% | 1.83% |
| Healthcare | 17.78% | 16.5% |
| Consumer Defensive | 7.76% | 3.75% |
| Real Estate | 4.94% | 7.83% |
| Financial Services | 20.43% | 14.49% |
| Consumer Cyclical | 5.62% | 14.48% |
| Basic Materials | 3.1% | 3.98% |
The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
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%.
IWD is 5.94% more exposed to the Financial Services sector than SCHA (20.43% vs 14.49%). IWD’s exposure to Healthcare and Industrials stocks is 1.28% higher and 3.60% lower respectively (17.78% vs. 16.5% and 11.77% vs. 15.37%). In total, Energy, Utilities, and Real Estate also make up 1.57% more of the fund’s holdings compared to SCHA (14.58% vs. 13.01%).
Holdings
| IWD Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.58% |
| JPMorgan Chase & Co | 2.25% |
| Johnson & Johnson | 2.24% |
| UnitedHealth Group Inc | 1.78% |
| Procter & Gamble Co | 1.71% |
| The Walt Disney Co | 1.5% |
| Bank of America Corp | 1.43% |
| Comcast Corp Class A | 1.33% |
| Exxon Mobil Corp | 1.2% |
| Pfizer Inc | 1.18% |
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
| 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
| IWD | SCHA | |
| Mean Return | 1.03 | 1.14 |
| R-squared | 92.38 | 82.26 |
| Std. Deviation | 14.35 | 18.68 |
| Alpha | -3.23 | -4.65 |
| Beta | 1.02 | 1.25 |
| Sharpe Ratio | 0.81 | 0.7 |
| Treynor Ratio | 11.06 | 9.62 |
The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Treynor Ratio of 11.06 and a R-squared of 92.38. Its Sharpe Ratio is 0.81 while IWD’s Alpha is -3.23. Furthermore, the fund has a Mean Return of 1.03 and a Beta of 1.02.
The Schwab U.S. Small-Cap ETF (SCHA) has a Mean Return of 1.14 with a R-squared of 82.26 and a Treynor Ratio of 9.62. Its Alpha is -4.65 while SCHA’s Standard Deviation is 18.68. Furthermore, the fund has a Sharpe Ratio of 0.7 and a Beta of 1.25.
IWD’s Mean Return is 0.11 points lower than that of SCHA and its R-squared is 10.12 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than SCHA. The Alpha and Beta of IWD are 1.42 points higher and 0.23 points lower than SCHA’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | SCHA |
| 2020 | 2.67% | 19.35% |
| 2019 | 26.34% | 26.54% |
| 2018 | -8.4% | -11.75% |
| 2017 | 13.47% | 15.04% |
| 2016 | 17.09% | 19.88% |
| 2015 | -3.95% | -4.24% |
| 2014 | 13.21% | 6.53% |
| 2013 | 32.18% | 39.59% |
| 2012 | 17.28% | 18.24% |
| 2011 | 0.21% | -2.95% |
| 2010 | 15.3% | 28.31% |
IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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 |
| IWD | $10,000 | $26,666 | 11.40% |
| SCHA | $10,000 | $30,035 | 12.62% |
A $10,000 investment in IWD would have resulted in a final balance of $26,666. This is a profit of $16,666 over 10 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 1.22 percentage points lower than that of SCHA and as a result, would have yielded $3,369 less on a $10,000 investment. Thus, IWD performed worse than SCHA by 1.22% annually.
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