SCHB vs. SCHA: What’s The Difference?

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

The expense ratio of SCHB is 0.01 percentage points lower than SCHA’s (0.03% vs. 0.04%). SCHB also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHB has provided higher returns than SCHA over the past 10 years.

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

Summary

SCHB SCHA
Name Schwab U.S. Broad Market ETF Schwab U.S. Small-Cap ETF
Category Large Blend Small Blend
Issuer Schwab ETFs Schwab ETFs
AUM 21.44B 16.51B
Avg. Return 14.43% 12.62%
Div. Yield 1.39% 0.98%
Expense Ratio 0.03% 0.04%

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 Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

SCHB’s dividend yield is 0.41% higher than that of SCHA (1.39% vs. 0.98%). Also, SCHB yielded on average 1.81% more per year over the past decade (14.43% vs. 12.62%). The expense ratio of SCHB is 0.01 percentage points lower than SCHA’s (0.03% vs. 0.04%).

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Fund Composition

Industry Exposure

SCHB vs. SCHA - Industry Exposure

SCHB SCHA
Technology 24.15% 14.91%
Industrials 9.29% 15.37%
Energy 2.78% 3.35%
Communication Services 10.52% 3.5%
Utilities 2.32% 1.83%
Healthcare 13.37% 16.5%
Consumer Defensive 5.76% 3.75%
Real Estate 3.58% 7.83%
Financial Services 13.88% 14.49%
Consumer Cyclical 11.9% 14.48%
Basic Materials 2.45% 3.98%

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 Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

SCHB is 9.24% more exposed to the Technology sector than SCHA (24.15% vs 14.91%). SCHB’s exposure to Financial Services and Healthcare stocks is 0.61% lower and 3.13% lower respectively (13.88% vs. 14.49% and 13.37% vs. 16.5%). In total, Basic Materials, Energy, and Real Estate also make up 6.35% less of the fund’s holdings compared to SCHA (8.81% vs. 15.16%).

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%.

SCHA - Holdings

SCHA Holdings Weight
AMC Entertainment Holdings Inc Class A 0.67%
Caesars Entertainment Inc 0.51%
Cloudflare Inc 0.48%
NovoCure Ltd 0.45%
Plug Power Inc 0.41%
10x Genomics Inc Ordinary Shares – Class A 0.34%
GameStop Corp Class A 0.28%
RH 0.27%
Penn National Gaming Inc 0.27%
Axon Enterprise Inc 0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

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Risk Analysis

SCHB SCHA
Mean Return 1.23 1.14
R-squared 99.33 82.26
Std. Deviation 14.12 18.68
Alpha -0.58 -4.65
Beta 1.04 1.25
Sharpe Ratio 1 0.7
Treynor Ratio 13.58 9.62

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

The Schwab U.S. Small-Cap ETF (SCHA) has a Alpha of -4.65 with a Beta of 1.25 and a R-squared of 82.26. Its Mean Return is 1.14 while SCHA’s Treynor Ratio is 9.62. Furthermore, the fund has a Standard Deviation of 18.68 and a Sharpe Ratio of 0.7.

SCHB’s Mean Return is 0.09 points higher than that of SCHA and its R-squared is 17.07 points higher. With a Standard Deviation of 14.12, SCHB is slightly less volatile than SCHA. The Alpha and Beta of SCHB are 4.07 points higher and 0.21 points lower than SCHA’s Alpha and Beta.

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Performance

Annual Returns

SCHB vs. SCHA - Annual Returns

Year SCHB SCHA
2020 20.77% 19.35%
2019 30.94% 26.54%
2018 -5.25% -11.75%
2017 21.18% 15.04%
2016 12.56% 19.88%
2015 0.45% -4.24%
2014 12.67% 6.53%
2013 33.37% 39.59%
2012 16.22% 18.24%
2011 1.4% -2.95%
2010 17.1% 28.31%

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 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.

Portfolio Growth

SCHB vs. SCHA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
SCHA $10,000 $30,035 12.62%

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 SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.

SCHB’s CAGR is 1.81 percentage points higher than that of SCHA and as a result, would have yielded $6,319 more on a $10,000 investment. Thus, SCHB outperformed SCHA by 1.81% annually.


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