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IWM vs. SCHF: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between IWM and SCHF? And which fund is better?

The expense ratio of IWM is 0.13 percentage points higher than SCHF’s (0.19% vs. 0.06%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than SCHF over the past ten years.

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

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Summary

IWMSCHF
NameiShares Russell 2000 ETFSchwab International Equity ETF
CategorySmall BlendForeign Large Blend
IssueriSharesSchwab ETFs
AUM66.48B26.99B
Avg. Return13.52%6.43%
Div. Yield0.86%2.16%
Expense Ratio0.19%0.06%

The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

IWM’s dividend yield is 1.30% lower than that of SCHF (0.86% vs. 2.16%). Also, IWM yielded on average 7.09% more per year over the past decade (13.52% vs. 6.43%). The expense ratio of IWM is 0.13 percentage points higher than SCHF’s (0.19% vs. 0.06%).

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Fund Composition

Industry Exposure

IWM vs. SCHF - Industry Exposure

IWMSCHF
Technology14.21%11.55%
Industrials14.78%14.86%
Energy3.74%4.23%
Communication Services3.79%5.65%
Utilities2.44%3.09%
Healthcare20.3%11.05%
Consumer Defensive3.65%9.41%
Real Estate8.59%3.17%
Financial Services13.76%17.85%
Consumer Cyclical10.99%10.87%
Basic Materials3.74%8.26%

The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.

IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

IWM is 9.25% more exposed to the Healthcare sector than SCHF (20.3% vs 11.05%). IWM’s exposure to Industrials and Technology stocks is 0.08% lower and 2.66% higher respectively (14.78% vs. 14.86% and 14.21% vs. 11.55%). In total, Consumer Defensive, Basic Materials, and Energy also make up 10.77% less of the fund’s holdings compared to SCHF (11.13% vs. 21.90%).

Holdings

IWM - Holdings

IWM HoldingsWeight
AMC Entertainment Holdings Inc Class A0.52%
Intellia Therapeutics Inc0.33%
Crocs Inc0.3%
BlackRock Cash Funds Treasury SL Agency0.29%
Tenet Healthcare Corp0.26%
Lattice Semiconductor Corp0.26%
Tetra Tech Inc0.25%
II-VI Inc0.25%
EastGroup Properties Inc0.24%
Arrowhead Pharmaceuticals Inc0.24%

IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.

Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.

SCHF - Holdings

SCHF HoldingsWeight
Nestle SA1.66%
Samsung Electronics Co Ltd1.6%
ASML Holding NV1.29%
Roche Holding AG1.24%
Toyota Motor Corp1.02%
LVMH Moet Hennessy Louis Vuitton SE0.93%
Novartis AG0.92%
Shopify Inc A0.78%
AstraZeneca PLC0.75%
SAP SE0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

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Risk Analysis

IWMSCHF
Mean Return1.120.58
R-squared77.7398.16
Std. Deviation18.8715.08
Alpha-5.120.53
Beta1.230.99
Sharpe Ratio0.680.42
Treynor Ratio9.565.39

The iShares Russell 2000 ETF (IWM) has a Sharpe Ratio of 0.68 with a R-squared of 77.73 and a Treynor Ratio of 9.56. Its Beta is 1.23 while IWM’s Mean Return is 1.12. Furthermore, the fund has a Standard Deviation of 18.87 and a Alpha of -5.12.

The Schwab International Equity ETF (SCHF) has a Beta of 0.99 with a Mean Return of 0.58 and a R-squared of 98.16. Its Treynor Ratio is 5.39 while SCHF’s Standard Deviation is 15.08. Furthermore, the fund has a Alpha of 0.53 and a Sharpe Ratio of 0.42.

IWM’s Mean Return is 0.54 points higher than that of SCHF and its R-squared is 20.43 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than SCHF. The Alpha and Beta of IWM are 5.65 points lower and 0.24 points higher than SCHF’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. SCHF - Annual Returns

YearIWMSCHF
202019.89%9.86%
201925.42%22.15%
2018-11.02%-14.39%
201714.66%25.83%
201621.36%2.88%
2015-4.33%-2.44%
20144.94%-4.44%
201338.85%20.03%
201216.39%17.12%
2011-4.19%-12.32%
201026.76%8.6%

IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% respectively.

The year 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.

Portfolio Growth

IWM vs. SCHF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$28,94113.52%
SCHF$10,000$17,0896.43%

A $10,000 investment in IWM would have resulted in a final balance of $28,941. This is a profit of $18,941 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.52%.

With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.

IWM’s CAGR is 7.09 percentage points higher than that of SCHF and as a result, would have yielded $11,852 more on a $10,000 investment. Thus, IWM outperformed SCHF by 7.09% annually.


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