The Schwab U.S. Small-Cap ETF (SCHA) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between SCHA and IWN? And which fund is better?
The expense ratio of SCHA is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%). SCHA also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, SCHA has provided higher returns than IWN over the past 10 years.
In this article, we’ll compare SCHA vs. IWN. We’ll look at holdings and industry exposure, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss SCHA’s and IWN’s fund composition, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Schwab U.S. Small-Cap ETF||iShares Russell 2000 Value ETF|
|Category||Small Blend||Small Value|
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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
SCHA’s dividend yield is 0.28% lower than that of IWN (0.98% vs. 1.26%). Also, SCHA yielded on average 1.66% more per year over the past decade (12.62% vs. 10.96%). The expense ratio of SCHA is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%).
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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
SCHA is 5.56% more exposed to the Healthcare sector than IWN (16.5% vs 10.94%). SCHA’s exposure to Industrials and Technology stocks is 0.79% higher and 8.89% higher respectively (15.37% vs. 14.58% and 14.91% vs. 6.02%). In total, Energy, Communication Services, and Consumer Defensive also make up 3.18% less of the fund’s holdings compared to IWN (10.60% vs. 13.78%).
|AMC Entertainment Holdings Inc Class A||0.67%|
|Caesars Entertainment Inc||0.51%|
|Plug Power Inc||0.41%|
|10x Genomics Inc Ordinary Shares – Class A||0.34%|
|GameStop Corp Class A||0.28%|
|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%.
|AMC Entertainment Holdings Inc Class A||1.06%|
|Tenet Healthcare Corp||0.47%|
|Stag Industrial Inc||0.47%|
|EMCOR Group Inc||0.42%|
|Valley National Bancorp||0.37%|
|Chesapeake Energy Corp Ordinary Shares – New||0.37%|
|Agree Realty Corp||0.36%|
|Essent Group Ltd||0.35%|
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
The Schwab U.S. Small-Cap ETF (SCHA) has a Standard Deviation of 18.68 with a Treynor Ratio of 9.62 and a Sharpe Ratio of 0.7. Its Alpha is -4.65 while SCHA’s Mean Return is 1.14. Furthermore, the fund has a R-squared of 82.26 and a Beta of 1.25.
The iShares Russell 2000 Value ETF (IWN) has a Treynor Ratio of 8.3 with a Beta of 1.21 and a Mean Return of 1.01. Its R-squared is 72.64 while IWN’s Alpha is -6.32. Furthermore, the fund has a Standard Deviation of 19.28 and a Sharpe Ratio of 0.59.
SCHA’s Mean Return is 0.13 points higher than that of IWN and its R-squared is 9.62 points higher. With a Standard Deviation of 18.68, SCHA is slightly less volatile than IWN. The Alpha and Beta of SCHA are 1.67 points higher and 0.04 points higher than IWN’s Alpha and Beta.
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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.
SCHA’s CAGR is 1.66 percentage points higher than that of IWN and as a result, would have yielded $7,355 more on a $10,000 investment. Thus, SCHA outperformed IWN by 1.66% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.