The Schwab U.S. Small-Cap ETF (SCHA) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between SCHA and BIV? And which fund is better?
The expense ratio of SCHA is 0.01 percentage points lower than BIV’s (0.04% vs. 0.05%). SCHA also has a high exposure to the healthcare sector while BIV is mostly comprised of AAA bonds. Overall, SCHA has provided higher returns than BIV over the past 10 years.
In this article, we’ll compare SCHA vs. BIV. We’ll look at annual returns and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss SCHA’s and BIV’s performance, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| SCHA | BIV | |
| Name | Schwab U.S. Small-Cap ETF | Vanguard Intermediate-Term Bond Index Fund ETF Shares |
| Category | Small Blend | Intermediate-Term Bond |
| Issuer | Schwab ETFs | Vanguard |
| AUM | 16.51B | 39.05B |
| Avg. Return | 12.62% | 5.31% |
| Div. Yield | 0.98% | 2.06% |
| Expense Ratio | 0.04% | 0.05% |
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 Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
SCHA’s dividend yield is 1.08% lower than that of BIV (0.98% vs. 2.06%). Also, SCHA yielded on average 7.31% more per year over the past decade (12.62% vs. 5.31%). The expense ratio of SCHA is 0.01 percentage points lower than BIV’s (0.04% vs. 0.05%).
Fund Composition
Holdings
| SCHA Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 0.67% |
| Caesars Entertainment Inc | 0.51% |
| Cloudflare Inc | 0.48% |
| NovoCure Ltd | 0.45% |
| Plug Power Inc | 0.41% |
| 10x Genomics Inc Ordinary Shares – Class A | 0.34% |
| GameStop Corp Class A | 0.28% |
| RH | 0.27% |
| Penn National Gaming Inc | 0.27% |
| Axon Enterprise Inc | 0.27% |
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%.
| BIV Bond Sectors | Weight |
| AAA | 54.51% |
| BBB | 25.24% |
| A | 16.97% |
| AA | 3.1% |
| Others | 0.15% |
| Below B | 0.03% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| SCHA | BIV | |
| Mean Return | 1.14 | 0.35 |
| R-squared | 82.26 | 95.12 |
| Std. Deviation | 18.68 | 4.09 |
| Alpha | -4.65 | -0.07 |
| Beta | 1.25 | 1.33 |
| Sharpe Ratio | 0.7 | 0.89 |
| Treynor Ratio | 9.62 | 2.72 |
The Schwab U.S. Small-Cap ETF (SCHA) has a Sharpe Ratio of 0.7 with a Standard Deviation of 18.68 and a Beta of 1.25. Its R-squared is 82.26 while SCHA’s Alpha is -4.65. Furthermore, the fund has a Mean Return of 1.14 and a Treynor Ratio of 9.62.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Mean Return of 0.35 with a Sharpe Ratio of 0.89 and a Beta of 1.33. Its R-squared is 95.12 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Treynor Ratio of 2.72 and a Alpha of -0.07.
SCHA’s Mean Return is 0.79 points higher than that of BIV and its R-squared is 12.86 points lower. With a Standard Deviation of 18.68, SCHA is slightly more volatile than BIV. The Alpha and Beta of SCHA are 4.58 points lower and 0.08 points lower than BIV’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHA | BIV |
| 2020 | 19.35% | 9.71% |
| 2019 | 26.54% | 10.19% |
| 2018 | -11.75% | -0.09% |
| 2017 | 15.04% | 3.8% |
| 2016 | 19.88% | 2.86% |
| 2015 | -4.24% | 1.23% |
| 2014 | 6.53% | 7.0% |
| 2013 | 39.59% | -3.44% |
| 2012 | 18.24% | 7.02% |
| 2011 | -2.95% | 10.62% |
| 2010 | 28.31% | 9.55% |
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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHA | $10,000 | $30,035 | 12.62% |
| BIV | $10,000 | $15,967 | 5.31% |
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 BIV, the end total would have been $15,967. This equates to a $5,967 profit over 10 years and a compound annual growth rate (CAGR) of 5.31%.
SCHA’s CAGR is 7.31 percentage points higher than that of BIV and as a result, would have yielded $14,068 more on a $10,000 investment. Thus, SCHA outperformed BIV by 7.31% annually.
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