The Schwab U.S. Small-Cap ETF (SCHA) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between SCHA and TLT? And which fund is better?
The expense ratio of SCHA is 0.11 percentage points lower than TLT’s (0.04% vs. 0.15%). SCHA also has a high exposure to the healthcare sector while TLT is mostly comprised of AAA bonds. Overall, SCHA has provided higher returns than TLT over the past 10 years.
In this article, we’ll compare SCHA vs. TLT. We’ll look at industry exposure and annual returns, as well as at their fund composition and performance. Moreover, I’ll also discuss SCHA’s and TLT’s holdings, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||Schwab U.S. Small-Cap ETF||iShares 20+ Year Treasury Bond ETF|
|Category||Small Blend||Long Government|
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
SCHA’s dividend yield is 0.52% lower than that of TLT (0.98% vs. 1.5%). Also, SCHA yielded on average 3.63% more per year over the past decade (12.62% vs. 9.00%). The expense ratio of SCHA is 0.11 percentage points lower than TLT’s (0.04% vs. 0.15%).
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|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%.
|TLT Bond Sectors||Weight|
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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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 Sharpe Ratio of 0.7. Its Beta is 1.25 while SCHA’s Mean Return is 1.14. Furthermore, the fund has a Standard Deviation of 18.68 and a Alpha of -4.65.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Standard Deviation of 12.76 with a Sharpe Ratio of 0.55 and a Beta of 3.54. Its Mean Return is 0.63 while TLT’s Treynor Ratio is 1.82. Furthermore, the fund has a Alpha of -2.83 and a R-squared of 68.76.
SCHA’s Mean Return is 0.51 points higher than that of TLT and its R-squared is 13.50 points higher. With a Standard Deviation of 18.68, SCHA is slightly more volatile than TLT. The Alpha and Beta of SCHA are 1.82 points lower and 2.29 points lower than TLT’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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% 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 TLT, the end total would have been $21,793. This equates to a $11,793 profit over 10 years and a compound annual growth rate (CAGR) of 9.00%.
SCHA’s CAGR is 3.63 percentage points higher than that of TLT and as a result, would have yielded $8,242 more on a $10,000 investment. Thus, SCHA outperformed TLT by 3.63% annually.
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