SCHB vs. IWS: What’s The Difference?

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

The expense ratio of SCHB is 0.20 percentage points lower than IWS’s (0.03% vs. 0.23%). SCHB also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHB has provided higher returns than IWS over the past 10 years.

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

Summary

SCHB IWS
Name Schwab U.S. Broad Market ETF iShares Russell Mid-Cap Value ETF
Category Large Blend Mid-Cap Value
Issuer Schwab ETFs iShares
AUM 21.44B 14.24B
Avg. Return 14.43% 12.35%
Div. Yield 1.39% 1.34%
Expense Ratio 0.03% 0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

SCHB’s dividend yield is 0.05% higher than that of IWS (1.39% vs. 1.34%). Also, SCHB yielded on average 2.08% more per year over the past decade (14.43% vs. 12.35%). The expense ratio of SCHB is 0.20 percentage points lower than IWS’s (0.03% vs. 0.23%).

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Fund Composition

Industry Exposure

SCHB vs. IWS - Industry Exposure

SCHB IWS
Technology 24.15% 11.39%
Industrials 9.29% 14.6%
Energy 2.78% 4.71%
Communication Services 10.52% 4.08%
Utilities 2.32% 6.97%
Healthcare 13.37% 8.56%
Consumer Defensive 5.76% 4.76%
Real Estate 3.58% 11.71%
Financial Services 13.88% 15.75%
Consumer Cyclical 11.9% 12.07%
Basic Materials 2.45% 5.4%

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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

SCHB is 12.76% more exposed to the Technology sector than IWS (24.15% vs 11.39%). SCHB’s exposure to Financial Services and Healthcare stocks is 1.87% lower and 4.81% higher respectively (13.88% vs. 15.75% and 13.37% vs. 8.56%). In total, Basic Materials, Energy, and Real Estate also make up 13.01% less of the fund’s holdings compared to IWS (8.81% vs. 21.82%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

SCHB IWS
Mean Return 1.23 1.06
R-squared 99.33 87.04
Std. Deviation 14.12 16.03
Alpha -0.58 -4.11
Beta 1.04 1.1
Sharpe Ratio 1 0.75
Treynor Ratio 13.58 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Treynor Ratio of 10.3 with a Standard Deviation of 16.03 and a Mean Return of 1.06. Its R-squared is 87.04 while IWS’s Beta is 1.1. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Alpha of -4.11.

SCHB’s Mean Return is 0.17 points higher than that of IWS and its R-squared is 12.29 points higher. With a Standard Deviation of 14.12, SCHB is slightly less volatile than IWS. The Alpha and Beta of SCHB are 3.53 points higher and 0.06 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

SCHB vs. IWS - Annual Returns

Year SCHB IWS
2020 20.77% 4.76%
2019 30.94% 26.78%
2018 -5.25% -12.36%
2017 21.18% 13.1%
2016 12.56% 19.69%
2015 0.45% -4.93%
2014 12.67% 14.49%
2013 33.37% 33.11%
2012 16.22% 18.27%
2011 1.4% -1.55%
2010 17.1% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

SCHB vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
IWS $10,000 $26,581 12.35%

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 IWS, the end total would have been $26,581. This equates to a $16,581 profit over 10 years and a compound annual growth rate (CAGR) of 12.35%.

SCHB’s CAGR is 2.08 percentage points higher than that of IWS and as a result, would have yielded $9,773 more on a $10,000 investment. Thus, SCHB outperformed IWS by 2.08% annually.


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