MUB vs. SCHP: What’s The Difference?

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

The expense ratio of MUB is 0.02 percentage points higher than SCHP’s (0.07% vs. 0.05%). MUB is mostly comprised of AA bonds and SCHP has a high exposure to AAA bond. Overall, MUB has provided higher returns than SCHP over the past 10 years.

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

Summary

MUB SCHP
Name iShares National Muni Bond ETF Schwab U.S. TIPS ETF
Category Muni National Interm Inflation-Protected Bond
Issuer iShares Schwab ETFs
AUM 22.71B 18.41B
Avg. Return 4.04% 3.92%
Div. Yield 1.96% 1.97%
Expense Ratio 0.07% 0.05%

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. 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%.

MUB’s dividend yield is 0.01% lower than that of SCHP (1.96% vs. 1.97%). Also, MUB yielded on average 0.12% more per year over the past decade (4.04% vs. 3.92%). The expense ratio of MUB is 0.02 percentage points higher than SCHP’s (0.07% vs. 0.05%).

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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.

SCHP - Holdings

SCHP Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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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Risk Analysis

MUB SCHP
Mean Return 0.32 0.28
R-squared 99 66.16
Std. Deviation 3.68 4.32
Alpha -0.46 -0.5
Beta 1.01 1.17
Sharpe Ratio 0.88 0.64
Treynor Ratio 3.2 2.31

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

The Schwab U.S. TIPS ETF (SCHP) has a Beta of 1.17 with a Mean Return of 0.28 and a Alpha of -0.5. Its Standard Deviation is 4.32 while SCHP’s R-squared is 66.16. Furthermore, the fund has a Sharpe Ratio of 0.64 and a Treynor Ratio of 2.31.

MUB’s Mean Return is 0.04 points higher than that of SCHP and its R-squared is 32.84 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than SCHP. The Alpha and Beta of MUB are 0.04 points higher and 0.16 points lower than SCHP’s Alpha and Beta.

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Performance

Annual Returns

MUB vs. SCHP - Annual Returns

Year MUB SCHP
2020 4.87% 10.94%
2019 7.28% 8.36%
2018 0.86% -1.31%
2017 4.61% 2.95%
2016 0.06% 4.6%
2015 2.99% -1.5%
2014 8.61% 3.56%
2013 -3.26% -8.66%
2012 6.14% 6.83%
2011 10.85% 13.38%
2010 1.4% 0.0%

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 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.

Portfolio Growth

MUB vs. SCHP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $15,121 4.04%
SCHP $10,000 $14,418 3.92%

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 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%.

MUB’s CAGR is 0.12 percentage points higher than that of SCHP and as a result, would have yielded $703 more on a $10,000 investment. Thus, MUB outperformed SCHP by 0.12% annually.


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