The Schwab U.S. Broad Market ETF (SCHB) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and DGRO is a iShares Large Value fund. So, what’s the difference between SCHB and DGRO? And which fund is better?
The expense ratio of SCHB is 0.05 percentage points lower than DGRO’s (0.03% vs. 0.08%). SCHB also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHB has provided higher returns than DGRO over the past 6 years.
In this article, we’ll compare SCHB vs. DGRO. We’ll look at industry exposure and fund composition, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss SCHB’s and DGRO’s performance, annual returns, and risk metrics and examine how these affect their overall returns.
Summary
| SCHB | DGRO | |
| Name | Schwab U.S. Broad Market ETF | iShares Core Dividend Growth ETF |
| Category | Large Blend | Large Value |
| Issuer | Schwab ETFs | iShares |
| AUM | 21.44B | 20B |
| Avg. Return | 14.43% | 12.46% |
| Div. Yield | 1.39% | 2.04% |
| Expense Ratio | 0.03% | 0.08% |
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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
SCHB’s dividend yield is 0.65% lower than that of DGRO (1.39% vs. 2.04%). Also, SCHB yielded on average 1.97% more per year over the past decade (14.43% vs. 12.46%). The expense ratio of SCHB is 0.05 percentage points lower than DGRO’s (0.03% vs. 0.08%).
Fund Composition
Industry Exposure
| SCHB | DGRO | |
| Technology | 24.15% | 18.98% |
| Industrials | 9.29% | 12.52% |
| Energy | 2.78% | 0.11% |
| Communication Services | 10.52% | 4.53% |
| Utilities | 2.32% | 7.34% |
| Healthcare | 13.37% | 17.55% |
| Consumer Defensive | 5.76% | 10.24% |
| Real Estate | 3.58% | 0.0% |
| Financial Services | 13.88% | 18.47% |
| Consumer Cyclical | 11.9% | 7.42% |
| Basic Materials | 2.45% | 2.83% |
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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.
DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.
SCHB is 5.17% more exposed to the Technology sector than DGRO (24.15% vs 18.98%). SCHB’s exposure to Financial Services and Healthcare stocks is 4.59% lower and 4.18% lower respectively (13.88% vs. 18.47% and 13.37% vs. 17.55%). In total, Basic Materials, Energy, and Real Estate also make up 5.87% more of the fund’s holdings compared to DGRO (8.81% vs. 2.94%).
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%.
| DGRO Holdings | Weight |
| Microsoft Corp | 3.29% |
| Apple Inc | 3.26% |
| Pfizer Inc | 2.89% |
| Johnson & Johnson | 2.87% |
| Procter & Gamble Co | 2.79% |
| Verizon Communications Inc | 2.68% |
| JPMorgan Chase & Co | 2.57% |
| The Home Depot Inc | 2.35% |
| Merck & Co Inc | 2.11% |
| Cisco Systems Inc | 1.98% |
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
Risk Analysis
| SCHB | DGRO | |
| Mean Return | 1.23 | 0 |
| R-squared | 99.33 | 0 |
| Std. Deviation | 14.12 | 0 |
| Alpha | -0.58 | 0 |
| Beta | 1.04 | 0 |
| Sharpe Ratio | 1 | 0 |
| Treynor Ratio | 13.58 | 0 |
The Schwab U.S. Broad Market ETF (SCHB) has a R-squared of 99.33 with a Alpha of -0.58 and a Beta of 1.04. Its Mean Return is 1.23 while SCHB’s Sharpe Ratio is 1. Furthermore, the fund has a Standard Deviation of 14.12 and a Treynor Ratio of 13.58.
The iShares Core Dividend Growth ETF (DGRO) has a Beta of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Standard Deviation is 0 while DGRO’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.
SCHB’s Mean Return is 1.23 points higher than that of DGRO and its R-squared is 99.33 points higher. With a Standard Deviation of 14.12, SCHB is slightly more volatile than DGRO. The Alpha and Beta of SCHB are 0.58 points lower and 1.04 points higher than DGRO’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHB | DGRO |
| 2020 | 20.77% | 9.47% |
| 2019 | 30.94% | 30.02% |
| 2018 | -5.25% | -2.24% |
| 2017 | 21.18% | 22.84% |
| 2016 | 12.56% | 15.27% |
| 2015 | 0.45% | -0.62% |
| 2014 | 12.67% | 0.0% |
| 2013 | 33.37% | 0.0% |
| 2012 | 16.22% | 0.0% |
| 2011 | 1.4% | 0.0% |
| 2010 | 17.1% | 0.0% |
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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth 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
| Fund | Initial Balance | Final Balance | CAGR |
| SCHB | $10,000 | $20,529 | 14.43% |
| DGRO | $10,000 | $19,580 | 12.46% |
A $10,000 investment in SCHB would have resulted in a final balance of $20,529. This is a profit of $10,529 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.43%.
With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.
SCHB’s CAGR is 1.97 percentage points higher than that of DGRO and as a result, would have yielded $949 more on a $10,000 investment. Thus, SCHB outperformed DGRO by 1.97% annually.
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