The Schwab U.S. Broad Market ETF (SCHB) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between SCHB and MTUM? And which fund is better?
The expense ratio of SCHB is 0.12 percentage points lower than MTUM’s (0.03% vs. 0.15%). SCHB also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHB has provided lower returns than MTUM over the past 7 years.
In this article, we’ll compare SCHB vs. MTUM. We’ll look at risk metrics and performance, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss SCHB’s and MTUM’s holdings, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| SCHB | MTUM | |
| Name | Schwab U.S. Broad Market ETF | iShares MSCI USA Momentum Factor ETF |
| Category | Large Blend | Large Growth |
| Issuer | Schwab ETFs | iShares |
| AUM | 21.44B | 14.53B |
| Avg. Return | 14.43% | 17.37% |
| Div. Yield | 1.39% | 0.44% |
| Expense Ratio | 0.03% | 0.15% |
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 USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.
SCHB’s dividend yield is 0.95% higher than that of MTUM (1.39% vs. 0.44%). Also, SCHB yielded on average 2.94% less per year over the past decade (14.43% vs. 17.37%). The expense ratio of SCHB is 0.12 percentage points lower than MTUM’s (0.03% vs. 0.15%).
Fund Composition
Industry Exposure
| SCHB | MTUM | |
| Technology | 24.15% | 15.24% |
| Industrials | 9.29% | 12.47% |
| Energy | 2.78% | 1.77% |
| Communication Services | 10.52% | 13.18% |
| Utilities | 2.32% | 0.19% |
| Healthcare | 13.37% | 6.41% |
| Consumer Defensive | 5.76% | 2.88% |
| Real Estate | 3.58% | 0.43% |
| Financial Services | 13.88% | 34.32% |
| Consumer Cyclical | 11.9% | 9.96% |
| Basic Materials | 2.45% | 3.15% |
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 USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.
MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.
SCHB is 8.91% more exposed to the Technology sector than MTUM (24.15% vs 15.24%). SCHB’s exposure to Financial Services and Healthcare stocks is 20.44% lower and 6.96% higher respectively (13.88% vs. 34.32% and 13.37% vs. 6.41%). In total, Basic Materials, Energy, and Real Estate also make up 3.46% more of the fund’s holdings compared to MTUM (8.81% vs. 5.35%).
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%.
| MTUM Holdings | Weight |
| Tesla Inc | 5.63% |
| The Walt Disney Co | 4.39% |
| JPMorgan Chase & Co | 4.35% |
| Berkshire Hathaway Inc Class B | 4.34% |
| Bank of America Corp | 3.81% |
| PayPal Holdings Inc | 3.76% |
| Wells Fargo & Co | 3.05% |
| Applied Materials Inc | 3.05% |
| Moderna Inc | 2.89% |
| Alphabet Inc Class C | 2.84% |
MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.
PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.
Risk Analysis
| SCHB | MTUM | |
| 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 Mean Return of 1.23 with a Sharpe Ratio of 1 and a Treynor Ratio of 13.58. Its Beta is 1.04 while SCHB’s Alpha is -0.58. Furthermore, the fund has a R-squared of 99.33 and a Standard Deviation of 14.12.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Alpha of 0. Its Standard Deviation is 0 while MTUM’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.
SCHB’s Mean Return is 1.23 points higher than that of MTUM and its R-squared is 99.33 points higher. With a Standard Deviation of 14.12, SCHB is slightly more volatile than MTUM. The Alpha and Beta of SCHB are 0.58 points lower and 1.04 points higher than MTUM’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHB | MTUM |
| 2020 | 20.77% | 29.69% |
| 2019 | 30.94% | 27.57% |
| 2018 | -5.25% | -1.77% |
| 2017 | 21.18% | 37.6% |
| 2016 | 12.56% | 4.89% |
| 2015 | 0.45% | 9.12% |
| 2014 | 12.67% | 14.48% |
| 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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHB | $10,000 | $23,130 | 14.43% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in SCHB would have resulted in a final balance of $23,130. This is a profit of $13,130 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.43%.
With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.
SCHB’s CAGR is 2.94 percentage points lower than that of MTUM and as a result, would have yielded $6,171 less on a $10,000 investment. Thus, SCHB performed worse than MTUM by 2.94% annually.
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