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.
|Name||Schwab U.S. Small-Cap ETF||iShares Russell Mid-Cap Value ETF|
|Category||Small Blend||Mid-Cap 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 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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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%).
|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%.
|Marvell Technology Inc||0.69%|
|IHS Markit Ltd||0.62%|
|Prudential Financial Inc||0.56%|
|Otis Worldwide Corp Ordinary Shares||0.54%|
|International Flavors & Fragrances Inc||0.53%|
|Xcel Energy Inc||0.52%|
|Motorola Solutions Inc||0.52%|
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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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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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.
|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 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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