The Schwab U.S. Dividend Equity ETF (SCHD) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and IAU is a iShares N/A fund. So, what’s the difference between SCHD and IAU? And which fund is better?
The expense ratio of SCHD is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than IAU over the past 8 years.
In this article, we’ll compare SCHD vs. IAU. We’ll look at annual returns and industry exposure, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss SCHD’s and IAU’s performance, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| SCHD | IAU | |
| Name | Schwab U.S. Dividend Equity ETF | iShares Gold Trust |
| Category | Large Value | N/A |
| Issuer | Schwab ETFs | iShares |
| AUM | 26B | 28.61B |
| Avg. Return | 14.80% | 6.03% |
| Div. Yield | 2.89% | 0.0% |
| Expense Ratio | 0.06% | 0.25% |
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
SCHD’s dividend yield is 2.89% higher than that of IAU (2.89% vs. 0.0%). Also, SCHD yielded on average 8.77% more per year over the past decade (14.80% vs. 6.03%). The expense ratio of SCHD is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%).
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Fund Composition
Industry Exposure
| SCHD | IAU | |
| Technology | 16.26% | 0.0% |
| Industrials | 18.05% | 0.0% |
| Energy | 1.87% | 0.0% |
| Communication Services | 4.96% | 0.0% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 12.64% | 0.0% |
| Consumer Defensive | 14.04% | 0.0% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 21.69% | 0.0% |
| Consumer Cyclical | 8.36% | 0.0% |
| Basic Materials | 2.13% | 0.0% |
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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
SCHD is 21.69% more exposed to the Financial Services sector than IAU (21.69% vs 0.0%). SCHD’s exposure to Industrials and Technology stocks is 18.05% higher and 16.26% higher respectively (18.05% vs. 0.0% and 16.26% vs. 0.0%). In total, Utilities, Energy, and Basic Materials also make up 4.00% more of the fund’s holdings compared to IAU (4.00% vs. 0.00%).
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%.
| IAU Holdings | Weight |
| Gold | 100.0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
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Risk Analysis
| SCHD | IAU | |
| Mean Return | 0 | 0.23 |
| R-squared | 0 | 16.03 |
| Std. Deviation | 0 | 16.97 |
| Alpha | 0 | 4.16 |
| Beta | 0 | 0.48 |
| Sharpe Ratio | 0 | 0.13 |
| Treynor Ratio | 0 | 1.5 |
The Schwab U.S. Dividend Equity ETF (SCHD) has a Sharpe Ratio of 0 with a R-squared of 0 and a Beta of 0. Its Alpha is 0 while SCHD’s Standard Deviation is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.
The iShares Gold Trust (IAU) has a Beta of 0.48 with a Mean Return of 0.23 and a R-squared of 16.03. Its Standard Deviation is 16.97 while IAU’s Treynor Ratio is 1.5. Furthermore, the fund has a Sharpe Ratio of 0.13 and a Alpha of 4.16.
SCHD’s Mean Return is 0.23 points lower than that of IAU and its R-squared is 16.03 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than IAU. The Alpha and Beta of SCHD are 4.16 points lower and 0.48 points lower than IAU’s Alpha and Beta.
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Performance
Annual Returns
| Year | SCHD | IAU |
| 2020 | 15.11% | 23.86% |
| 2019 | 27.28% | 18.54% |
| 2018 | -5.46% | -1.39% |
| 2017 | 20.88% | 11.58% |
| 2016 | 16.25% | 8.85% |
| 2015 | -0.21% | -11.65% |
| 2014 | 11.66% | -0.44% |
| 2013 | 32.9% | -27.96% |
| 2012 | 11.4% | 8.37% |
| 2011 | 0.0% | 8.66% |
| 2010 | 0.0% | 27.93% |
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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHD | $10,000 | $28,823 | 14.80% |
| IAU | $10,000 | $11,142 | 6.03% |
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 IAU, the end total would have been $11,142. This equates to a $1,142 profit over 8 years and a compound annual growth rate (CAGR) of 6.03%.
SCHD’s CAGR is 8.77 percentage points higher than that of IAU and as a result, would have yielded $17,681 more on a $10,000 investment. Thus, SCHD outperformed IAU by 8.77% annually.
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