The iShares Russell 1000 Value ETF (IWD) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between IWD and SCHB? And which fund is better?
The expense ratio of IWD is 0.16 percentage points higher than SCHB’s (0.19% vs. 0.03%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare IWD vs. SCHB. We’ll look at holdings and industry exposure, as well as at their performance and annual returns. Moreover, I’ll also discuss IWD’s and SCHB’s portfolio growth, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||iShares Russell 1000 Value ETF||Schwab U.S. Broad Market ETF|
|Category||Large Value||Large Blend|
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. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
IWD’s dividend yield is 0.18% higher than that of SCHB (1.57% vs. 1.39%). Also, IWD yielded on average 3.03% less per year over the past decade (11.40% vs. 14.43%). The expense ratio of IWD is 0.16 percentage points higher than SCHB’s (0.19% vs. 0.03%).
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. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.
SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.
IWD is 6.55% more exposed to the Financial Services sector than SCHB (20.43% vs 13.88%). IWD’s exposure to Healthcare and Industrials stocks is 4.41% higher and 2.48% higher respectively (17.78% vs. 13.37% and 11.77% vs. 9.29%). In total, Energy, Utilities, and Real Estate also make up 5.90% more of the fund’s holdings compared to SCHB (14.58% vs. 8.68%).
|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%|
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%.
|Facebook Inc A||1.88%|
|Alphabet Inc A||1.66%|
|Alphabet Inc Class C||1.61%|
|Berkshire Hathaway Inc Class B||1.19%|
|JPMorgan Chase & Co||1.06%|
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Sharpe Ratio of 0.81 and a R-squared of 92.38. Its Mean Return is 1.03 while IWD’s Beta is 1.02. Furthermore, the fund has a Treynor Ratio of 11.06 and a Standard Deviation of 14.35.
The Schwab U.S. Broad Market ETF (SCHB) has a Treynor Ratio of 13.58 with a R-squared of 99.33 and a Alpha of -0.58. Its Beta is 1.04 while SCHB’s Sharpe Ratio is 1. Furthermore, the fund has a Mean Return of 1.23 and a Standard Deviation of 14.12.
IWD’s Mean Return is 0.20 points lower than that of SCHB and its R-squared is 6.95 points lower. With a Standard Deviation of 14.35, IWD is slightly more volatile than SCHB. The Alpha and Beta of IWD are 2.65 points lower and 0.02 points lower than SCHB’s Alpha and Beta.
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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.
IWD’s CAGR is 3.03 percentage points lower than that of SCHB and as a result, would have yielded $9,688 less on a $10,000 investment. Thus, IWD performed worse than SCHB by 3.03% annually.
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