The Schwab U.S. Small-Cap ETF (SCHA) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between SCHA and MTUM? And which fund is better?
The expense ratio of SCHA is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%). SCHA also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, SCHA has provided lower returns than MTUM over the past 7 years.
In this article, we’ll compare SCHA vs. MTUM. We’ll look at annual returns and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss SCHA’s and MTUM’s portfolio growth, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| SCHA | MTUM | |
| Name | Schwab U.S. Small-Cap ETF | iShares MSCI USA Momentum Factor ETF |
| Category | Small Blend | Large Growth |
| Issuer | Schwab ETFs | iShares |
| AUM | 16.51B | 14.53B |
| Avg. Return | 12.62% | 17.37% |
| Div. Yield | 0.98% | 0.44% |
| Expense Ratio | 0.04% | 0.15% |
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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.
SCHA’s dividend yield is 0.54% higher than that of MTUM (0.98% vs. 0.44%). Also, SCHA yielded on average 4.75% less per year over the past decade (12.62% vs. 17.37%). The expense ratio of SCHA is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%).
Fund Composition
Industry Exposure
| SCHA | MTUM | |
| Technology | 14.91% | 15.24% |
| Industrials | 15.37% | 12.47% |
| Energy | 3.35% | 1.77% |
| Communication Services | 3.5% | 13.18% |
| Utilities | 1.83% | 0.19% |
| Healthcare | 16.5% | 6.41% |
| Consumer Defensive | 3.75% | 2.88% |
| Real Estate | 7.83% | 0.43% |
| Financial Services | 14.49% | 34.32% |
| Consumer Cyclical | 14.48% | 9.96% |
| Basic Materials | 3.98% | 3.15% |
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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.
MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.
SCHA is 10.09% more exposed to the Healthcare sector than MTUM (16.5% vs 6.41%). SCHA’s exposure to Industrials and Technology stocks is 2.90% higher and 0.33% lower respectively (15.37% vs. 12.47% and 14.91% vs. 15.24%). In total, Energy, Communication Services, and Consumer Defensive also make up 7.23% less of the fund’s holdings compared to MTUM (10.60% vs. 17.83%).
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%.
| MTUM Holdings | Weight |
| Tesla Inc | 5.63% |
| The Walt Disney Co | 4.39% |
| JPMorgan Chase & Co | 4.35% |
| Berkshire Hathaway Inc Class B | 4.34% |
| Bank of America Corp | 3.81% |
| PayPal Holdings Inc | 3.76% |
| Wells Fargo & Co | 3.05% |
| Applied Materials Inc | 3.05% |
| Moderna Inc | 2.89% |
| Alphabet Inc Class C | 2.84% |
MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.
PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.
Risk Analysis
| SCHA | MTUM | |
| 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 Beta of 1.25 with a Sharpe Ratio of 0.7 and a Treynor Ratio of 9.62. Its R-squared is 82.26 while SCHA’s Mean Return is 1.14. Furthermore, the fund has a Alpha of -4.65 and a Standard Deviation of 18.68.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Treynor Ratio of 0 with a R-squared of 0 and a Beta of 0. Its Standard Deviation is 0 while MTUM’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.
SCHA’s Mean Return is 1.14 points higher than that of MTUM and its R-squared is 82.26 points higher. With a Standard Deviation of 18.68, SCHA is slightly more volatile than MTUM. The Alpha and Beta of SCHA are 4.65 points lower and 1.25 points higher than MTUM’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHA | MTUM |
| 2020 | 19.35% | 29.69% |
| 2019 | 26.54% | 27.57% |
| 2018 | -11.75% | -1.77% |
| 2017 | 15.04% | 37.6% |
| 2016 | 19.88% | 4.89% |
| 2015 | -4.24% | 9.12% |
| 2014 | 6.53% | 14.48% |
| 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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHA | $10,000 | $18,750 | 12.62% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in SCHA would have resulted in a final balance of $18,750. This is a profit of $8,750 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.62%.
With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.
SCHA’s CAGR is 4.75 percentage points lower than that of MTUM and as a result, would have yielded $10,551 less on a $10,000 investment. Thus, SCHA performed worse than MTUM by 4.75% annually.
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