The iShares Russell 2000 ETF (IWM) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between IWM and SCHP? And which fund is better?
The expense ratio of IWM is 0.14 percentage points higher than SCHP’s (0.19% vs. 0.05%). IWM also has a high exposure to the healthcare sector while SCHP is mostly comprised of AAA bonds. Overall, IWM has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare IWM vs. SCHP. We’ll look at holdings and annual returns, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss IWM’s and SCHP’s risk metrics, fund composition, and performance and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||Schwab U.S. TIPS ETF|
|Category||Small Blend||Inflation-Protected Bond|
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
IWM’s dividend yield is 1.11% lower than that of SCHP (0.86% vs. 1.97%). Also, IWM yielded on average 9.61% more per year over the past decade (13.52% vs. 3.92%). The expense ratio of IWM is 0.14 percentage points higher than SCHP’s (0.19% vs. 0.05%).
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|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
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%.
|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The iShares Russell 2000 ETF (IWM) has a Alpha of -5.12 with a R-squared of 77.73 and a Beta of 1.23. Its Standard Deviation is 18.87 while IWM’s Mean Return is 1.12. Furthermore, the fund has a Sharpe Ratio of 0.68 and a Treynor Ratio of 9.56.
The Schwab U.S. TIPS ETF (SCHP) has a Standard Deviation of 4.32 with a Beta of 1.17 and a R-squared of 66.16. Its Treynor Ratio is 2.31 while SCHP’s Sharpe Ratio is 0.64. Furthermore, the fund has a Alpha of -0.5 and a Mean Return of 0.28.
IWM’s Mean Return is 0.84 points higher than that of SCHP and its R-squared is 11.57 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than SCHP. The Alpha and Beta of IWM are 4.62 points lower and 0.06 points higher than SCHP’s Alpha and Beta.
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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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
IWM’s CAGR is 9.61 percentage points higher than that of SCHP and as a result, would have yielded $14,523 more on a $10,000 investment. Thus, IWM outperformed SCHP by 9.61% annually.
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