The iShares Russell 2000 ETF (IWM) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between IWM and SCHX? And which fund is better?
The expense ratio of IWM is 0.16 percentage points higher than SCHX’s (0.19% vs. 0.03%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than SCHX over the past ten years.
In this article, we’ll compare IWM vs. SCHX. We’ll look at annual returns and fund composition, as well as at their performance and risk metrics. Moreover, I’ll also discuss IWM’s and SCHX’s industry exposure, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||Schwab U.S. Large-Cap ETF|
|Category||Small Blend||Large Blend|
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 ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.
IWM’s dividend yield is 0.55% lower than that of SCHX (0.86% vs. 1.41%). Also, IWM yielded on average 1.08% less per year over the past decade (13.52% vs. 14.60%). The expense ratio of IWM is 0.16 percentage points higher than SCHX’s (0.19% vs. 0.03%).
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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 ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.
SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.
IWM is 7.26% more exposed to the Healthcare sector than SCHX (20.3% vs 13.04%). IWM’s exposure to Industrials and Technology stocks is 6.13% higher and 10.92% lower respectively (14.78% vs. 8.65% and 14.21% vs. 25.13%). In total, Consumer Defensive, Basic Materials, and Energy also make up 0.16% more of the fund’s holdings compared to SCHX (11.13% vs. 10.97%).
|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%.
|Facebook Inc A||2.08%|
|Alphabet Inc A||1.84%|
|Alphabet Inc Class C||1.78%|
|Berkshire Hathaway Inc Class B||1.32%|
|JPMorgan Chase & Co||1.18%|
SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.
Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.
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The iShares Russell 2000 ETF (IWM) has a Sharpe Ratio of 0.68 with a Standard Deviation of 18.87 and a Mean Return of 1.12. Its Treynor Ratio is 9.56 while IWM’s R-squared is 77.73. Furthermore, the fund has a Beta of 1.23 and a Alpha of -5.12.
The Schwab U.S. Large-Cap ETF (SCHX) has a R-squared of 99.83 with a Standard Deviation of 13.8 and a Treynor Ratio of 14.06. Its Beta is 1.02 while SCHX’s Alpha is -0.14. Furthermore, the fund has a Mean Return of 1.24 and a Sharpe Ratio of 1.03.
IWM’s Mean Return is 0.12 points lower than that of SCHX and its R-squared is 22.10 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than SCHX. The Alpha and Beta of IWM are 4.98 points lower and 0.21 points higher than SCHX’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 2013 was the strongest year for SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% 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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.
IWM’s CAGR is 1.08 percentage points lower than that of SCHX and as a result, would have yielded $8,046 less on a $10,000 investment. Thus, IWM performed worse than SCHX by 1.08% annually.
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