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SCHA vs. ACWI: What’s The Difference?

The Schwab U.S. Small-Cap ETF (SCHA) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between SCHA and ACWI? And which fund is better?

The expense ratio of SCHA is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%). SCHA also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, SCHA has provided higher returns than ACWI over the past 10 years.

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

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Summary

SCHAACWI
NameSchwab U.S. Small-Cap ETFiShares MSCI ACWI ETF
CategorySmall BlendN/A
IssuerSchwab ETFsiShares
AUM16.51B16.85B
Avg. Return12.62%10.21%
Div. Yield0.98%1.39%
Expense Ratio0.04%0.32%

The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

SCHA’s dividend yield is 0.41% lower than that of ACWI (0.98% vs. 1.39%). Also, SCHA yielded on average 2.41% more per year over the past decade (12.62% vs. 10.21%). The expense ratio of SCHA is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%).

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Fund Composition

Industry Exposure

SCHA vs. ACWI - Industry Exposure

SCHAACWI
Technology14.91%20.41%
Industrials15.37%9.65%
Energy3.35%3.48%
Communication Services3.5%9.87%
Utilities1.83%2.61%
Healthcare16.5%11.74%
Consumer Defensive3.75%7.15%
Real Estate7.83%2.75%
Financial Services14.49%15.58%
Consumer Cyclical14.48%12.01%
Basic Materials3.98%4.73%

The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

SCHA is 4.76% more exposed to the Healthcare sector than ACWI (16.5% vs 11.74%). SCHA’s exposure to Industrials and Technology stocks is 5.72% higher and 5.50% lower respectively (15.37% vs. 9.65% and 14.91% vs. 20.41%). In total, Energy, Communication Services, and Consumer Defensive also make up 9.90% less of the fund’s holdings compared to ACWI (10.60% vs. 20.50%).

Holdings

SCHA - Holdings

SCHA HoldingsWeight
AMC Entertainment Holdings Inc Class A0.67%
Caesars Entertainment Inc0.51%
Cloudflare Inc0.48%
NovoCure Ltd0.45%
Plug Power Inc0.41%
10x Genomics Inc Ordinary Shares – Class A0.34%
GameStop Corp Class A0.28%
RH0.27%
Penn National Gaming Inc0.27%
Axon Enterprise Inc0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

SCHAACWI
Mean Return1.140.89
R-squared82.2699.96
Std. Deviation18.6814.05
Alpha-4.650.15
Beta1.251
Sharpe Ratio0.70.71
Treynor Ratio9.629.45

The Schwab U.S. Small-Cap ETF (SCHA) has a Treynor Ratio of 9.62 with a Sharpe Ratio of 0.7 and a Alpha of -4.65. Its Standard Deviation is 18.68 while SCHA’s R-squared is 82.26. Furthermore, the fund has a Beta of 1.25 and a Mean Return of 1.14.

The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a Alpha of 0.15 and a Standard Deviation of 14.05. Its Mean Return is 0.89 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Treynor Ratio of 9.45 and a Beta of 1.

SCHA’s Mean Return is 0.25 points higher than that of ACWI and its R-squared is 17.70 points lower. With a Standard Deviation of 18.68, SCHA is slightly more volatile than ACWI. The Alpha and Beta of SCHA are 4.80 points lower and 0.25 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

SCHA vs. ACWI - Annual Returns

YearSCHAACWI
202019.35%16.38%
201926.54%26.7%
2018-11.75%-9.15%
201715.04%24.35%
201619.88%8.22%
2015-4.24%-2.39%
20146.53%4.64%
201339.59%22.91%
201218.24%15.99%
2011-2.95%-7.6%
201028.31%12.31%

SCHA had its best year in 2013 with an annual return of 39.59%. SCHA’s worst year over the past decade yielded -11.75% and occurred in 2018. In most years the Schwab U.S. Small-Cap ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 15.04%, 18.24%, and 19.35% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

SCHA vs. ACWI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHA$10,000$30,03512.62%
ACWI$10,000$24,25510.21%

A $10,000 investment in SCHA would have resulted in a final balance of $30,035. This is a profit of $20,035 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.62%.

With a $10,000 investment in ACWI, the end total would have been $24,255. This equates to a $14,255 profit over 10 years and a compound annual growth rate (CAGR) of 10.21%.

SCHA’s CAGR is 2.41 percentage points higher than that of ACWI and as a result, would have yielded $5,780 more on a $10,000 investment. Thus, SCHA outperformed ACWI by 2.41% annually.


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