SCHA vs. VLUE: What’s The Difference?

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

The expense ratio of SCHA is 0.11 percentage points lower than VLUE’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 higher returns than VLUE over the past 7 years.

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

Summary

SCHA VLUE
Name Schwab U.S. Small-Cap ETF iShares MSCI USA Value Factor ETF
Category Small Blend Large Value
Issuer Schwab ETFs iShares
AUM 16.51B 15.95B
Avg. Return 12.62% 8.91%
Div. Yield 0.98% 1.89%
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 Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

SCHA’s dividend yield is 0.91% lower than that of VLUE (0.98% vs. 1.89%). Also, SCHA yielded on average 3.71% more per year over the past decade (12.62% vs. 8.91%). The expense ratio of SCHA is 0.11 percentage points lower than VLUE’s (0.04% vs. 0.15%).

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Fund Composition

Industry Exposure

SCHA vs. VLUE - Industry Exposure

SCHA VLUE
Technology 14.91% 26.89%
Industrials 15.37% 9.14%
Energy 3.35% 2.42%
Communication Services 3.5% 10.39%
Utilities 1.83% 2.68%
Healthcare 16.5% 14.31%
Consumer Defensive 3.75% 7.22%
Real Estate 7.83% 3.19%
Financial Services 14.49% 10.96%
Consumer Cyclical 14.48% 10.66%
Basic Materials 3.98% 2.14%

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 Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

SCHA is 2.19% more exposed to the Healthcare sector than VLUE (16.5% vs 14.31%). SCHA’s exposure to Industrials and Technology stocks is 6.23% higher and 11.98% lower respectively (15.37% vs. 9.14% and 14.91% vs. 26.89%). In total, Energy, Communication Services, and Consumer Defensive also make up 9.43% less of the fund’s holdings compared to VLUE (10.60% vs. 20.03%).

Holdings

SCHA - 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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

SCHA VLUE
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 Mean Return of 1.14 and a Standard Deviation of 18.68. Its R-squared is 82.26 while SCHA’s Sharpe Ratio is 0.7. Furthermore, the fund has a Treynor Ratio of 9.62 and a Alpha of -4.65.

The iShares MSCI USA Value Factor ETF (VLUE) has a Standard Deviation of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Beta is 0 while VLUE’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.

SCHA’s Mean Return is 1.14 points higher than that of VLUE and its R-squared is 82.26 points higher. With a Standard Deviation of 18.68, SCHA is slightly more volatile than VLUE. The Alpha and Beta of SCHA are 4.65 points lower and 1.25 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

SCHA vs. VLUE - Annual Returns

Year SCHA VLUE
2020 19.35% -0.32%
2019 26.54% 27.47%
2018 -11.75% -11.18%
2017 15.04% 21.97%
2016 19.88% 15.68%
2015 -4.24% -3.54%
2014 6.53% 12.29%
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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

SCHA vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHA $10,000 $18,750 12.62%
VLUE $10,000 $17,247 8.91%

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 VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

SCHA’s CAGR is 3.71 percentage points higher than that of VLUE and as a result, would have yielded $1,503 more on a $10,000 investment. Thus, SCHA outperformed VLUE by 3.71% annually.


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