MUB vs. SCHG: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between MUB and SCHG? And which fund is better?

The expense ratio of MUB is 0.03 percentage points higher than SCHG’s (0.07% vs. 0.04%). MUB is mostly comprised of AA bonds while SCHG has a high exposure to the technology sector. Overall, MUB has provided lower returns than SCHG over the past 10 years.

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

Summary

MUB SCHG
Name iShares National Muni Bond ETF Schwab U.S. Large-Cap Growth ETF
Category Muni National Interm Large Growth
Issuer iShares Schwab ETFs
AUM 22.71B 15.16B
Avg. Return 4.04% 17.81%
Div. Yield 1.96% 0.43%
Expense Ratio 0.07% 0.04%

The iShares National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

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%.

MUB’s dividend yield is 1.53% higher than that of SCHG (1.96% vs. 0.43%). Also, MUB yielded on average 13.77% less per year over the past decade (4.04% vs. 17.81%). The expense ratio of MUB is 0.03 percentage points higher than SCHG’s (0.07% vs. 0.04%).

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Fund Composition

Holdings

MUB - Holdings

MUB Bond Sectors Weight
AA 60.38%
AAA 18.39%
A 15.04%
BBB 6.0%
Others 0.17%
BB 0.02%
Below B 0.0%
B 0.0%
US Government 0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

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

MUB SCHG
Mean Return 0.32 1.46
R-squared 99 92.92
Std. Deviation 3.68 14.78
Alpha -0.46 1.97
Beta 1.01 1.05
Sharpe Ratio 0.88 1.14
Treynor Ratio 3.2 16.3

The iShares National Muni Bond ETF (MUB) has a Treynor Ratio of 3.2 with a Alpha of -0.46 and a R-squared of 99. Its Mean Return is 0.32 while MUB’s Sharpe Ratio is 0.88. Furthermore, the fund has a Standard Deviation of 3.68 and a Beta of 1.01.

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

MUB’s Mean Return is 1.14 points lower than that of SCHG and its R-squared is 6.08 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than SCHG. The Alpha and Beta of MUB are 2.43 points lower and 0.04 points lower than SCHG’s Alpha and Beta.

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Performance

Annual Returns

MUB vs. SCHG - Annual Returns

Year MUB SCHG
2020 4.87% 39.13%
2019 7.28% 36.21%
2018 0.86% -1.35%
2017 4.61% 28.04%
2016 0.06% 6.76%
2015 2.99% 3.26%
2014 8.61% 15.74%
2013 -3.26% 33.96%
2012 6.14% 17.02%
2011 10.85% -0.67%
2010 1.4% 16.83%

MUB had its best year in 2011 with an annual return of 10.85%. MUB’s worst year over the past decade yielded -3.26% and occurred in 2013. In most years the iShares National Muni Bond ETF provided moderate returns such as in 2015, 2017, and 2020 where annual returns amounted to 2.99%, 4.61%, and 4.87% 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

MUB vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $15,121 4.04%
SCHG $10,000 $47,556 17.81%

A $10,000 investment in MUB would have resulted in a final balance of $15,121. This is a profit of $5,121 over 10 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

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%.

MUB’s CAGR is 13.77 percentage points lower than that of SCHG and as a result, would have yielded $32,435 less on a $10,000 investment. Thus, MUB performed worse than SCHG by 13.77% annually.


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