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IWM vs. SCHG: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between IWM and SCHG? And which fund is better?

The expense ratio of IWM is 0.15 percentage points higher than SCHG’s (0.19% vs. 0.04%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than SCHG over the past ten years.

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

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Summary

IWMSCHG
NameiShares Russell 2000 ETFSchwab U.S. Large-Cap Growth ETF
CategorySmall BlendLarge Growth
IssueriSharesSchwab ETFs
AUM66.48B15.16B
Avg. Return13.52%17.81%
Div. Yield0.86%0.43%
Expense Ratio0.19%0.04%

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 U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

IWM’s dividend yield is 0.43% higher than that of SCHG (0.86% vs. 0.43%). Also, IWM yielded on average 4.29% less per year over the past decade (13.52% vs. 17.81%). The expense ratio of IWM is 0.15 percentage points higher than SCHG’s (0.19% vs. 0.04%).

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Fund Composition

Industry Exposure

IWM vs. SCHG - Industry Exposure

IWMSCHG
Technology14.21%39.21%
Industrials14.78%3.01%
Energy3.74%0.2%
Communication Services3.79%17.07%
Utilities2.44%0.0%
Healthcare20.3%12.05%
Consumer Defensive3.65%2.15%
Real Estate8.59%1.64%
Financial Services13.76%7.98%
Consumer Cyclical10.99%15.01%
Basic Materials3.74%1.68%

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 U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

IWM is 8.25% more exposed to the Healthcare sector than SCHG (20.3% vs 12.05%). IWM’s exposure to Industrials and Technology stocks is 11.77% higher and 25.00% lower respectively (14.78% vs. 3.01% and 14.21% vs. 39.21%). In total, Consumer Defensive, Basic Materials, and Energy also make up 7.10% more of the fund’s holdings compared to SCHG (11.13% vs. 4.03%).

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%.

SCHG - Holdings

SCHG HoldingsWeight
Apple Inc11.49%
Microsoft Corp10.91%
Amazon.com Inc7.89%
Facebook Inc A4.45%
Alphabet Inc A3.93%
Alphabet Inc Class C3.82%
Tesla Inc2.8%
NVIDIA Corp2.67%
Visa Inc Class A2.12%
UnitedHealth Group Inc2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

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Risk Analysis

IWMSCHG
Mean Return1.121.46
R-squared77.7392.92
Std. Deviation18.8714.78
Alpha-5.121.97
Beta1.231.05
Sharpe Ratio0.681.14
Treynor Ratio9.5616.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Alpha of 1.97 with a Beta of 1.05 and a Standard Deviation of 14.78. Its Mean Return is 1.46 while SCHG’s Treynor Ratio is 16.3. Furthermore, the fund has a R-squared of 92.92 and a Sharpe Ratio of 1.14.

IWM’s Mean Return is 0.34 points lower than that of SCHG and its R-squared is 15.19 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than SCHG. The Alpha and Beta of IWM are 7.09 points lower and 0.18 points higher than SCHG’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. SCHG - Annual Returns

YearIWMSCHG
202019.89%39.13%
201925.42%36.21%
2018-11.02%-1.35%
201714.66%28.04%
201621.36%6.76%
2015-4.33%3.26%
20144.94%15.74%
201338.85%33.96%
201216.39%17.02%
2011-4.19%-0.67%
201026.76%16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

IWM vs. SCHG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$28,94113.52%
SCHG$10,000$47,55617.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

IWM’s CAGR is 4.29 percentage points lower than that of SCHG and as a result, would have yielded $18,615 less on a $10,000 investment. Thus, IWM performed worse than SCHG by 4.29% annually.


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