SCHB vs. ACWI: What’s The Difference?

The Schwab U.S. Broad Market ETF (SCHB) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between SCHB and ACWI? And which fund is better?

The expense ratio of SCHB is 0.29 percentage points lower than ACWI’s (0.03% vs. 0.32%). SCHB also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHB has provided higher returns than ACWI over the past 10 years.

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

Summary

SCHB ACWI
Name Schwab U.S. Broad Market ETF iShares MSCI ACWI ETF
Category Large Blend N/A
Issuer Schwab ETFs iShares
AUM 21.44B 16.85B
Avg. Return 14.43% 10.21%
Div. Yield 1.39% 1.39%
Expense Ratio 0.03% 0.32%

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

SCHB’s dividend yield is 0.00% lower than that of ACWI (1.39% vs. 1.39%). Also, SCHB yielded on average 4.22% more per year over the past decade (14.43% vs. 10.21%). The expense ratio of SCHB is 0.29 percentage points lower than ACWI’s (0.03% vs. 0.32%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

SCHB vs. ACWI - Industry Exposure

SCHB ACWI
Technology 24.15% 20.41%
Industrials 9.29% 9.65%
Energy 2.78% 3.48%
Communication Services 10.52% 9.87%
Utilities 2.32% 2.61%
Healthcare 13.37% 11.74%
Consumer Defensive 5.76% 7.15%
Real Estate 3.58% 2.75%
Financial Services 13.88% 15.58%
Consumer Cyclical 11.9% 12.01%
Basic Materials 2.45% 4.73%

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

SCHB is 3.74% more exposed to the Technology sector than ACWI (24.15% vs 20.41%). SCHB’s exposure to Financial Services and Healthcare stocks is 1.70% lower and 1.63% higher respectively (13.88% vs. 15.58% and 13.37% vs. 11.74%). In total, Basic Materials, Energy, and Real Estate also make up 2.15% less of the fund’s holdings compared to ACWI (8.81% vs. 10.96%).

Holdings

SCHB - Holdings

SCHB Holdings Weight
Apple Inc 4.86%
Microsoft Corp 4.61%
Amazon.com Inc 3.33%
Facebook Inc A 1.88%
Alphabet Inc A 1.66%
Alphabet Inc Class C 1.61%
Berkshire Hathaway Inc Class B 1.19%
Tesla Inc 1.18%
NVIDIA Corp 1.13%
JPMorgan Chase & Co 1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

SCHB ACWI
Mean Return 1.23 0.89
R-squared 99.33 99.96
Std. Deviation 14.12 14.05
Alpha -0.58 0.15
Beta 1.04 1
Sharpe Ratio 1 0.71
Treynor Ratio 13.58 9.45

The Schwab U.S. Broad Market ETF (SCHB) has a Sharpe Ratio of 1 with a Standard Deviation of 14.12 and a Beta of 1.04. Its Mean Return is 1.23 while SCHB’s Treynor Ratio is 13.58. Furthermore, the fund has a Alpha of -0.58 and a R-squared of 99.33.

The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a Mean Return of 0.89 and a R-squared of 99.96. Its Beta is 1 while ACWI’s Standard Deviation is 14.05. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Alpha of 0.15.

SCHB’s Mean Return is 0.34 points higher than that of ACWI and its R-squared is 0.63 points lower. With a Standard Deviation of 14.12, SCHB is slightly more volatile than ACWI. The Alpha and Beta of SCHB are 0.73 points lower and 0.04 points higher than ACWI’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

SCHB vs. ACWI - Annual Returns

Year SCHB ACWI
2020 20.77% 16.38%
2019 30.94% 26.7%
2018 -5.25% -9.15%
2017 21.18% 24.35%
2016 12.56% 8.22%
2015 0.45% -2.39%
2014 12.67% 4.64%
2013 33.37% 22.91%
2012 16.22% 15.99%
2011 1.4% -7.6%
2010 17.1% 12.31%

SCHB had its best year in 2013 with an annual return of 33.37%. SCHB’s worst year over the past decade yielded -5.25% and occurred in 2018. In most years the Schwab U.S. Broad Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.67%, 16.22%, and 17.1% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

SCHB vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
ACWI $10,000 $24,255 10.21%

A $10,000 investment in SCHB would have resulted in a final balance of $36,354. This is a profit of $26,354 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.43%.

With a $10,000 investment in ACWI, the end total would have been $24,255. This equates to a $14,255 profit over 10 years and a compound annual growth rate (CAGR) of 10.21%.

SCHB’s CAGR is 4.22 percentage points higher than that of ACWI and as a result, would have yielded $12,099 more on a $10,000 investment. Thus, SCHB outperformed ACWI by 4.22% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply