The iShares Russell 1000 Value ETF (IWD) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between IWD and SCHD? And which fund is better?
The expense ratio of IWD is 0.13 percentage points higher than SCHD’s (0.19% vs. 0.06%). IWD also has a lower exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare IWD vs. SCHD. We’ll look at annual returns and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss IWD’s and SCHD’s fund composition, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| IWD | SCHD | |
| Name | iShares Russell 1000 Value ETF | Schwab U.S. Dividend Equity ETF |
| Category | Large Value | Large Value |
| Issuer | iShares | Schwab ETFs |
| AUM | 54.1B | 26B |
| Avg. Return | 11.40% | 14.80% |
| Div. Yield | 1.57% | 2.89% |
| Expense Ratio | 0.19% | 0.06% |
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. 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%.
IWD’s dividend yield is 1.32% lower than that of SCHD (1.57% vs. 2.89%). Also, IWD yielded on average 3.40% less per year over the past decade (11.40% vs. 14.80%). The expense ratio of IWD is 0.13 percentage points higher than SCHD’s (0.19% vs. 0.06%).
Fund Composition
Industry Exposure
| IWD | SCHD | |
| Technology | 10.28% | 16.26% |
| Industrials | 11.77% | 18.05% |
| Energy | 4.76% | 1.87% |
| Communication Services | 8.67% | 4.96% |
| Utilities | 4.88% | 0.0% |
| Healthcare | 17.78% | 12.64% |
| Consumer Defensive | 7.76% | 14.04% |
| Real Estate | 4.94% | 0.0% |
| Financial Services | 20.43% | 21.69% |
| Consumer Cyclical | 5.62% | 8.36% |
| Basic Materials | 3.1% | 2.13% |
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. 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%.
IWD is 1.26% less exposed to the Financial Services sector than SCHD (20.43% vs 21.69%). IWD’s exposure to Healthcare and Industrials stocks is 5.14% higher and 6.28% lower respectively (17.78% vs. 12.64% and 11.77% vs. 18.05%). In total, Energy, Utilities, and Real Estate also make up 12.71% more of the fund’s holdings compared to SCHD (14.58% vs. 1.87%).
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%.
| 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%.
Risk Analysis
| IWD | SCHD | |
| Mean Return | 1.03 | 0 |
| R-squared | 92.38 | 0 |
| Std. Deviation | 14.35 | 0 |
| Alpha | -3.23 | 0 |
| Beta | 1.02 | 0 |
| Sharpe Ratio | 0.81 | 0 |
| Treynor Ratio | 11.06 | 0 |
The iShares Russell 1000 Value ETF (IWD) has a Beta of 1.02 with a Sharpe Ratio of 0.81 and a Alpha of -3.23. Its R-squared is 92.38 while IWD’s Mean Return is 1.03. Furthermore, the fund has a Standard Deviation of 14.35 and a Treynor Ratio of 11.06.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Standard Deviation of 0 with a Alpha of 0 and a Mean Return of 0. Its R-squared is 0 while SCHD’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.
IWD’s Mean Return is 1.03 points higher than that of SCHD and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than SCHD. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than SCHD’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | SCHD |
| 2020 | 2.67% | 15.11% |
| 2019 | 26.34% | 27.28% |
| 2018 | -8.4% | -5.46% |
| 2017 | 13.47% | 20.88% |
| 2016 | 17.09% | 16.25% |
| 2015 | -3.95% | -0.21% |
| 2014 | 13.21% | 11.66% |
| 2013 | 32.18% | 32.9% |
| 2012 | 17.28% | 11.4% |
| 2011 | 0.21% | 0.0% |
| 2010 | 15.3% | 0.0% |
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 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 |
| IWD | $10,000 | $22,689 | 11.40% |
| SCHD | $10,000 | $28,823 | 14.80% |
A $10,000 investment in IWD would have resulted in a final balance of $22,689. This is a profit of $12,689 over 8 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 3.40 percentage points lower than that of SCHD and as a result, would have yielded $6,134 less on a $10,000 investment. Thus, IWD performed worse than SCHD by 3.40% annually.
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