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IWR vs. SCHB: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between IWR and SCHB? And which fund is better?

The expense ratio of IWR is 0.16 percentage points higher than SCHB’s (0.19% vs. 0.03%). IWR also has a lower exposure to the technology sector and a higher standard deviation. Overall, IWR has provided lower returns than SCHB over the past ten years.

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

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Summary

IWRSCHB
NameiShares Russell Mid-Cap ETFSchwab U.S. Broad Market ETF
CategoryMid-Cap BlendLarge Blend
IssueriSharesSchwab ETFs
AUM29.84B21.44B
Avg. Return14.15%14.43%
Div. Yield0.99%1.39%
Expense Ratio0.19%0.03%

The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

IWR’s dividend yield is 0.40% lower than that of SCHB (0.99% vs. 1.39%). Also, IWR yielded on average 0.28% less per year over the past decade (14.15% vs. 14.43%). The expense ratio of IWR is 0.16 percentage points higher than SCHB’s (0.19% vs. 0.03%).

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Fund Composition

Industry Exposure

IWR vs. SCHB - Industry Exposure

IWRSCHB
Technology19.67%24.15%
Industrials14.54%9.29%
Energy3.48%2.78%
Communication Services4.64%10.52%
Utilities4.46%2.32%
Healthcare11.76%13.37%
Consumer Defensive3.82%5.76%
Real Estate8.31%3.58%
Financial Services11.64%13.88%
Consumer Cyclical13.59%11.9%
Basic Materials4.1%2.45%

The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

IWR is 4.48% less exposed to the Technology sector than SCHB (19.67% vs 24.15%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 5.25% higher and 1.69% higher respectively (14.54% vs. 9.29% and 13.59% vs. 11.9%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 1.85% more of the fund’s holdings compared to SCHB (12.38% vs. 10.53%).

Holdings

IWR - Holdings

IWR HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

SCHB - Holdings

SCHB HoldingsWeight
Apple Inc4.86%
Microsoft Corp4.61%
Amazon.com Inc3.33%
Facebook Inc A1.88%
Alphabet Inc A1.66%
Alphabet Inc Class C1.61%
Berkshire Hathaway Inc Class B1.19%
Tesla Inc1.18%
NVIDIA Corp1.13%
JPMorgan Chase & Co1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

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Risk Analysis

IWRSCHB
Mean Return1.171.23
R-squared91.5299.33
Std. Deviation15.6614.12
Alpha-2.8-0.58
Beta1.111.04
Sharpe Ratio0.861
Treynor Ratio11.7213.58

The iShares Russell Mid-Cap ETF (IWR) has a Treynor Ratio of 11.72 with a Alpha of -2.8 and a Beta of 1.11. Its Mean Return is 1.17 while IWR’s Sharpe Ratio is 0.86. Furthermore, the fund has a R-squared of 91.52 and a Standard Deviation of 15.66.

The Schwab U.S. Broad Market ETF (SCHB) has a Alpha of -0.58 with a Treynor Ratio of 13.58 and a Beta of 1.04. Its Standard Deviation is 14.12 while SCHB’s Mean Return is 1.23. Furthermore, the fund has a R-squared of 99.33 and a Sharpe Ratio of 1.

IWR’s Mean Return is 0.06 points lower than that of SCHB and its R-squared is 7.81 points lower. With a Standard Deviation of 15.66, IWR is slightly more volatile than SCHB. The Alpha and Beta of IWR are 2.22 points lower and 0.07 points higher than SCHB’s Alpha and Beta.

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Performance

Annual Returns

IWR vs. SCHB - Annual Returns

YearIWRSCHB
202016.91%20.77%
201930.31%30.94%
2018-9.13%-5.25%
201718.32%21.18%
201613.58%12.56%
2015-2.57%0.45%
201413.03%12.67%
201334.5%33.37%
201217.13%16.22%
2011-1.67%1.4%
201025.25%17.1%

IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% respectively.

The year 2013 was the strongest year for SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.

Portfolio Growth

IWR vs. SCHB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWR$10,000$31,73714.15%
SCHB$10,000$36,35414.43%

A $10,000 investment in IWR would have resulted in a final balance of $31,737. This is a profit of $21,737 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

With a $10,000 investment in SCHB, the end total would have been $36,354. This equates to a $26,354 profit over 10 years and a compound annual growth rate (CAGR) of 14.43%.

IWR’s CAGR is 0.28 percentage points lower than that of SCHB and as a result, would have yielded $4,617 less on a $10,000 investment. Thus, IWR performed worse than SCHB by 0.28% annually.


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