SCHB vs. IWN: What’s The Difference?

The Schwab U.S. Broad Market ETF (SCHB) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between SCHB and IWN? And which fund is better?

The expense ratio of SCHB is 0.21 percentage points lower than IWN’s (0.03% vs. 0.24%). SCHB also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHB has provided higher returns than IWN over the past 10 years.

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

Summary

SCHB IWN
Name Schwab U.S. Broad Market ETF iShares Russell 2000 Value ETF
Category Large Blend Small Value
Issuer Schwab ETFs iShares
AUM 21.44B 15.48B
Avg. Return 14.43% 10.96%
Div. Yield 1.39% 1.26%
Expense Ratio 0.03% 0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

SCHB’s dividend yield is 0.13% higher than that of IWN (1.39% vs. 1.26%). Also, SCHB yielded on average 3.47% more per year over the past decade (14.43% vs. 10.96%). The expense ratio of SCHB is 0.21 percentage points lower than IWN’s (0.03% vs. 0.24%).

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Fund Composition

Industry Exposure

SCHB vs. IWN - Industry Exposure

SCHB IWN
Technology 24.15% 6.02%
Industrials 9.29% 14.58%
Energy 2.78% 5.84%
Communication Services 10.52% 4.17%
Utilities 2.32% 4.69%
Healthcare 13.37% 10.94%
Consumer Defensive 5.76% 3.77%
Real Estate 3.58% 14.36%
Financial Services 13.88% 22.97%
Consumer Cyclical 11.9% 8.39%
Basic Materials 2.45% 4.29%

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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

SCHB is 18.13% more exposed to the Technology sector than IWN (24.15% vs 6.02%). SCHB’s exposure to Financial Services and Healthcare stocks is 9.09% lower and 2.43% higher respectively (13.88% vs. 22.97% and 13.37% vs. 10.94%). In total, Basic Materials, Energy, and Real Estate also make up 15.68% less of the fund’s holdings compared to IWN (8.81% vs. 24.49%).

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%.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

SCHB IWN
Mean Return 1.23 1.01
R-squared 99.33 72.64
Std. Deviation 14.12 19.28
Alpha -0.58 -6.32
Beta 1.04 1.21
Sharpe Ratio 1 0.59
Treynor Ratio 13.58 8.3

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 Russell 2000 Value ETF (IWN) has a Sharpe Ratio of 0.59 with a Standard Deviation of 19.28 and a Treynor Ratio of 8.3. Its R-squared is 72.64 while IWN’s Beta is 1.21. Furthermore, the fund has a Mean Return of 1.01 and a Alpha of -6.32.

SCHB’s Mean Return is 0.22 points higher than that of IWN and its R-squared is 26.69 points higher. With a Standard Deviation of 14.12, SCHB is slightly less volatile than IWN. The Alpha and Beta of SCHB are 5.74 points higher and 0.17 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

SCHB vs. IWN - Annual Returns

Year SCHB IWN
2020 20.77% 4.5%
2019 30.94% 22.17%
2018 -5.25% -12.94%
2017 21.18% 7.73%
2016 12.56% 31.64%
2015 0.45% -7.53%
2014 12.67% 4.13%
2013 33.37% 34.3%
2012 16.22% 17.92%
2011 1.4% -5.64%
2010 17.1% 24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

SCHB vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
IWN $10,000 $22,680 10.96%

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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.

SCHB’s CAGR is 3.47 percentage points higher than that of IWN and as a result, would have yielded $13,674 more on a $10,000 investment. Thus, SCHB outperformed IWN by 3.47% annually.


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