The Schwab U.S. Dividend Equity ETF (SCHD) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between SCHD and EFV? And which fund is better?
The expense ratio of SCHD is 0.33 percentage points lower than EFV’s (0.06% vs. 0.39%). SCHD also has a lower exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than EFV over the past 8 years.
In this article, we’ll compare SCHD vs. EFV. We’ll look at fund composition and portfolio growth, as well as at their performance and risk metrics. Moreover, I’ll also discuss SCHD’s and EFV’s annual returns, industry exposure, and holdings and examine how these affect their overall returns.
Summary
| SCHD | EFV | |
| Name | Schwab U.S. Dividend Equity ETF | iShares MSCI EAFE Value ETF |
| Category | Large Value | Foreign Large Value |
| Issuer | Schwab ETFs | iShares |
| AUM | 26B | 14.37B |
| Avg. Return | 14.80% | 3.99% |
| Div. Yield | 2.89% | 2.94% |
| Expense Ratio | 0.06% | 0.39% |
The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
The iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
SCHD’s dividend yield is 0.05% lower than that of EFV (2.89% vs. 2.94%). Also, SCHD yielded on average 10.81% more per year over the past decade (14.80% vs. 3.99%). The expense ratio of SCHD is 0.33 percentage points lower than EFV’s (0.06% vs. 0.39%).
Fund Composition
Industry Exposure
| SCHD | EFV | |
| Technology | 16.26% | 2.98% |
| Industrials | 18.05% | 11.6% |
| Energy | 1.87% | 6.6% |
| Communication Services | 4.96% | 6.46% |
| Utilities | 0.0% | 6.14% |
| Healthcare | 12.64% | 9.19% |
| Consumer Defensive | 14.04% | 6.82% |
| Real Estate | 0.0% | 5.06% |
| Financial Services | 21.69% | 26.55% |
| Consumer Cyclical | 8.36% | 9.0% |
| Basic Materials | 2.13% | 9.59% |
The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
The iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
SCHD is 4.86% less exposed to the Financial Services sector than EFV (21.69% vs 26.55%). SCHD’s exposure to Industrials and Technology stocks is 6.45% higher and 13.28% higher respectively (18.05% vs. 11.6% and 16.26% vs. 2.98%). In total, Utilities, Energy, and Basic Materials also make up 18.33% less of the fund’s holdings compared to EFV (4.00% vs. 22.33%).
Holdings
| SCHD Holdings | Weight |
| Merck & Co Inc | 4.24% |
| The Home Depot Inc | 4.19% |
| Texas Instruments Inc | 4.16% |
| Broadcom Inc | 4.15% |
| Amgen Inc | 4.11% |
| PepsiCo Inc | 4.09% |
| BlackRock Inc | 4.05% |
| Pfizer Inc | 3.97% |
| Verizon Communications Inc | 3.96% |
| Cisco Systems Inc | 3.96% |
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| SCHD | EFV | |
| Mean Return | 0 | 0.42 |
| R-squared | 0 | 92.15 |
| Std. Deviation | 0 | 16.53 |
| Alpha | 0 | -1.77 |
| Beta | 0 | 1.05 |
| Sharpe Ratio | 0 | 0.26 |
| Treynor Ratio | 0 | 2.92 |
The Schwab U.S. Dividend Equity ETF (SCHD) has a Treynor Ratio of 0 with a Beta of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while SCHD’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
The iShares MSCI EAFE Value ETF (EFV) has a Alpha of -1.77 with a R-squared of 92.15 and a Treynor Ratio of 2.92. Its Mean Return is 0.42 while EFV’s Standard Deviation is 16.53. Furthermore, the fund has a Sharpe Ratio of 0.26 and a Beta of 1.05.
SCHD’s Mean Return is 0.42 points lower than that of EFV and its R-squared is 92.15 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than EFV. The Alpha and Beta of SCHD are 1.77 points higher and 1.05 points lower than EFV’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHD | EFV |
| 2020 | 15.11% | -2.78% |
| 2019 | 27.28% | 15.97% |
| 2018 | -5.46% | -14.88% |
| 2017 | 20.88% | 21.22% |
| 2016 | 16.25% | 4.87% |
| 2015 | -0.21% | -5.89% |
| 2014 | 11.66% | -5.65% |
| 2013 | 32.9% | 22.61% |
| 2012 | 11.4% | 17.52% |
| 2011 | 0.0% | -12.24% |
| 2010 | 0.0% | 3.18% |
SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% respectively.
The year 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHD | $10,000 | $28,823 | 14.80% |
| EFV | $10,000 | $13,281 | 3.99% |
A $10,000 investment in SCHD would have resulted in a final balance of $28,823. This is a profit of $18,823 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.80%.
With a $10,000 investment in EFV, the end total would have been $13,281. This equates to a $3,281 profit over 8 years and a compound annual growth rate (CAGR) of 3.99%.
SCHD’s CAGR is 10.81 percentage points higher than that of EFV and as a result, would have yielded $15,542 more on a $10,000 investment. Thus, SCHD outperformed EFV by 10.81% annually.
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