The Schwab U.S. Dividend Equity ETF (SCHD) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between SCHD and MUB? And which fund is better?

The expense ratio of SCHD is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%). SCHD also has a high exposure to the financial services sector while MUB is mostly comprised of AA bonds. Overall, SCHD has provided higher returns than MUB over the past 8 years.

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

Summary

SCHDMUB
NameSchwab U.S. Dividend Equity ETFiShares National Muni Bond ETF
CategoryLarge ValueMuni National Interm
IssuerSchwab ETFsiShares
AUM26B22.71B
Avg. Return14.80%4.04%
Div. Yield2.89%1.96%
Expense Ratio0.06%0.07%

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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

SCHD’s dividend yield is 0.93% higher than that of MUB (2.89% vs. 1.96%). Also, SCHD yielded on average 10.76% more per year over the past decade (14.80% vs. 4.04%). The expense ratio of SCHD is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%).

Fund Composition

Holdings

SCHD - Holdings

SCHD HoldingsWeight
Merck & Co Inc4.24%
The Home Depot Inc4.19%
Texas Instruments Inc4.16%
Broadcom Inc4.15%
Amgen Inc4.11%
PepsiCo Inc4.09%
BlackRock Inc4.05%
Pfizer Inc3.97%
Verizon Communications Inc3.96%
Cisco Systems Inc3.96%

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%.

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

Risk Analysis

SCHDMUB
Mean Return00.32
R-squared099
Std. Deviation03.68
Alpha0-0.46
Beta01.01
Sharpe Ratio00.88
Treynor Ratio03.2

The Schwab U.S. Dividend Equity ETF (SCHD) has a Sharpe Ratio of 0 with a R-squared of 0 and a Alpha of 0. Its Standard Deviation is 0 while SCHD’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.

The iShares National Muni Bond ETF (MUB) has a R-squared of 99 with a Standard Deviation of 3.68 and a Mean Return of 0.32. Its Treynor Ratio is 3.2 while MUB’s Alpha is -0.46. Furthermore, the fund has a Beta of 1.01 and a Sharpe Ratio of 0.88.

SCHD’s Mean Return is 0.32 points lower than that of MUB and its R-squared is 99.00 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than MUB. The Alpha and Beta of SCHD are 0.46 points higher and 1.01 points lower than MUB’s Alpha and Beta.

Performance

Annual Returns

SCHD vs. MUB - Annual Returns

YearSCHDMUB
202015.11%4.87%
201927.28%7.28%
2018-5.46%0.86%
201720.88%4.61%
201616.25%0.06%
2015-0.21%2.99%
201411.66%8.61%
201332.9%-3.26%
201211.4%6.14%
20110.0%10.85%
20100.0%1.4%

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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.

Portfolio Growth

SCHD vs. MUB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHD$10,000$28,82314.80%
MUB$10,000$12,8524.04%

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 MUB, the end total would have been $12,852. This equates to a $2,852 profit over 8 years and a compound annual growth rate (CAGR) of 4.04%.

SCHD’s CAGR is 10.76 percentage points higher than that of MUB and as a result, would have yielded $15,971 more on a $10,000 investment. Thus, SCHD outperformed MUB by 10.76% annually.

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