SCHA vs. IUSB: What’s The Difference?

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

The expense ratio of SCHA is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%). SCHA also has a high exposure to the healthcare sector while IUSB is mostly comprised of AAA bonds. Overall, SCHA has provided higher returns than IUSB over the past 6 years.

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

Summary

SCHA IUSB
Name Schwab U.S. Small-Cap ETF iShares Core Total USD Bond Market ETF
Category Small Blend N/A
Issuer Schwab ETFs iShares
AUM 16.51B 14.49B
Avg. Return 12.62% 4.13%
Div. Yield 0.98% 2.1%
Expense Ratio 0.04% 0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

SCHA’s dividend yield is 1.12% lower than that of IUSB (0.98% vs. 2.1%). Also, SCHA yielded on average 8.49% more per year over the past decade (12.62% vs. 4.13%). The expense ratio of SCHA is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%).

Fund Composition

Holdings

SCHA - 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%.

IUSB - Holdings

IUSB Bond Sectors Weight
AAA 58.32%
BBB 16.98%
A 12.27%
BB 4.33%
AA 3.36%
B 2.8%
Others 1.01%
Below B 0.92%
US Government 0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

Risk Analysis

SCHA IUSB
Mean Return 1.14 0
R-squared 82.26 0
Std. Deviation 18.68 0
Alpha -4.65 0
Beta 1.25 0
Sharpe Ratio 0.7 0
Treynor Ratio 9.62 0

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Beta of 0 with a R-squared of 0 and a Mean Return of 0. Its Standard Deviation is 0 while IUSB’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.

SCHA’s Mean Return is 1.14 points higher than that of IUSB and its R-squared is 82.26 points higher. With a Standard Deviation of 18.68, SCHA is slightly more volatile than IUSB. The Alpha and Beta of SCHA are 4.65 points lower and 1.25 points higher than IUSB’s Alpha and Beta.

Performance

Annual Returns

SCHA vs. IUSB - Annual Returns

Year SCHA IUSB
2020 19.35% 7.59%
2019 26.54% 9.26%
2018 -11.75% -0.38%
2017 15.04% 4.06%
2016 19.88% 3.78%
2015 -4.24% 0.46%
2014 6.53% 0.0%
2013 39.59% 0.0%
2012 18.24% 0.0%
2011 -2.95% 0.0%
2010 28.31% 0.0%

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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

SCHA vs. IUSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHA $10,000 $17,601 12.62%
IUSB $10,000 $12,704 4.13%

A $10,000 investment in SCHA would have resulted in a final balance of $17,601. This is a profit of $7,601 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.62%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

SCHA’s CAGR is 8.49 percentage points higher than that of IUSB and as a result, would have yielded $4,897 more on a $10,000 investment. Thus, SCHA outperformed IUSB by 8.49% annually.


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