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SCHA vs. IWS: What’s The Difference?

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

The expense ratio of SCHA is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%). SCHA also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, SCHA has provided higher returns than IWS over the past 10 years.

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

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Summary

SCHAIWS
NameSchwab U.S. Small-Cap ETFiShares Russell Mid-Cap Value ETF
CategorySmall BlendMid-Cap Value
IssuerSchwab ETFsiShares
AUM16.51B14.24B
Avg. Return12.62%12.35%
Div. Yield0.98%1.34%
Expense Ratio0.04%0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

SCHA’s dividend yield is 0.36% lower than that of IWS (0.98% vs. 1.34%). Also, SCHA yielded on average 0.28% more per year over the past decade (12.62% vs. 12.35%). The expense ratio of SCHA is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%).

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Fund Composition

Industry Exposure

SCHA vs. IWS - Industry Exposure

SCHAIWS
Technology14.91%11.39%
Industrials15.37%14.6%
Energy3.35%4.71%
Communication Services3.5%4.08%
Utilities1.83%6.97%
Healthcare16.5%8.56%
Consumer Defensive3.75%4.76%
Real Estate7.83%11.71%
Financial Services14.49%15.75%
Consumer Cyclical14.48%12.07%
Basic Materials3.98%5.4%

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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

SCHA is 7.94% more exposed to the Healthcare sector than IWS (16.5% vs 8.56%). SCHA’s exposure to Industrials and Technology stocks is 0.77% higher and 3.52% higher respectively (15.37% vs. 14.6% and 14.91% vs. 11.39%). In total, Energy, Communication Services, and Consumer Defensive also make up 2.95% less of the fund’s holdings compared to IWS (10.60% vs. 13.55%).

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

SCHAIWS
Mean Return1.141.06
R-squared82.2687.04
Std. Deviation18.6816.03
Alpha-4.65-4.11
Beta1.251.1
Sharpe Ratio0.70.75
Treynor Ratio9.6210.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Sharpe Ratio of 0.75 with a Beta of 1.1 and a Treynor Ratio of 10.3. Its Mean Return is 1.06 while IWS’s Alpha is -4.11. Furthermore, the fund has a R-squared of 87.04 and a Standard Deviation of 16.03.

SCHA’s Mean Return is 0.08 points higher than that of IWS and its R-squared is 4.78 points lower. With a Standard Deviation of 18.68, SCHA is slightly more volatile than IWS. The Alpha and Beta of SCHA are 0.54 points lower and 0.15 points higher than IWS’s Alpha and Beta.

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Performance

Annual Returns

SCHA vs. IWS - Annual Returns

YearSCHAIWS
202019.35%4.76%
201926.54%26.78%
2018-11.75%-12.36%
201715.04%13.1%
201619.88%19.69%
2015-4.24%-4.93%
20146.53%14.49%
201339.59%33.11%
201218.24%18.27%
2011-2.95%-1.55%
201028.31%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

SCHA vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHA$10,000$30,03512.62%
IWS$10,000$26,58112.35%

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 IWS, the end total would have been $26,581. This equates to a $16,581 profit over 10 years and a compound annual growth rate (CAGR) of 12.35%.

SCHA’s CAGR is 0.28 percentage points higher than that of IWS and as a result, would have yielded $3,454 more on a $10,000 investment. Thus, SCHA outperformed IWS by 0.28% annually.


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