SCHF vs. ACWI: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between SCHF and ACWI? And which fund is better?

The expense ratio of SCHF is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%). SCHF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, SCHF has provided lower returns than ACWI over the past 10 years.

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

Summary

SCHF ACWI
Name Schwab International Equity ETF iShares MSCI ACWI ETF
Category Foreign Large Blend N/A
Issuer Schwab ETFs iShares
AUM 26.99B 16.85B
Avg. Return 6.43% 10.21%
Div. Yield 2.16% 1.39%
Expense Ratio 0.06% 0.32%

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

SCHF’s dividend yield is 0.77% higher than that of ACWI (2.16% vs. 1.39%). Also, SCHF yielded on average 3.79% less per year over the past decade (6.43% vs. 10.21%). The expense ratio of SCHF is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%).

Fund Composition

Industry Exposure

SCHF vs. ACWI - Industry Exposure

SCHF ACWI
Technology 11.55% 20.41%
Industrials 14.86% 9.65%
Energy 4.23% 3.48%
Communication Services 5.65% 9.87%
Utilities 3.09% 2.61%
Healthcare 11.05% 11.74%
Consumer Defensive 9.41% 7.15%
Real Estate 3.17% 2.75%
Financial Services 17.85% 15.58%
Consumer Cyclical 10.87% 12.01%
Basic Materials 8.26% 4.73%

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

SCHF is 2.27% more exposed to the Financial Services sector than ACWI (17.85% vs 15.58%). SCHF’s exposure to Industrials and Technology stocks is 5.21% higher and 8.86% lower respectively (14.86% vs. 9.65% and 11.55% vs. 20.41%). In total, Real Estate, Energy, and Communication Services also make up 3.05% less of the fund’s holdings compared to ACWI (13.05% vs. 16.10%).

Holdings

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

Risk Analysis

SCHF ACWI
Mean Return 0.58 0.89
R-squared 98.16 99.96
Std. Deviation 15.08 14.05
Alpha 0.53 0.15
Beta 0.99 1
Sharpe Ratio 0.42 0.71
Treynor Ratio 5.39 9.45

The Schwab International Equity ETF (SCHF) has a R-squared of 98.16 with a Mean Return of 0.58 and a Standard Deviation of 15.08. Its Alpha is 0.53 while SCHF’s Sharpe Ratio is 0.42. Furthermore, the fund has a Treynor Ratio of 5.39 and a Beta of 0.99.

The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a Mean Return of 0.89 and a Standard Deviation of 14.05. Its Treynor Ratio is 9.45 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Beta of 1 and a R-squared of 99.96.

SCHF’s Mean Return is 0.31 points lower than that of ACWI and its R-squared is 1.80 points lower. With a Standard Deviation of 15.08, SCHF is slightly more volatile than ACWI. The Alpha and Beta of SCHF are 0.38 points higher and 0.01 points lower than ACWI’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. ACWI - Annual Returns

Year SCHF ACWI
2020 9.86% 16.38%
2019 22.15% 26.7%
2018 -14.39% -9.15%
2017 25.83% 24.35%
2016 2.88% 8.22%
2015 -2.44% -2.39%
2014 -4.44% 4.64%
2013 20.03% 22.91%
2012 17.12% 15.99%
2011 -12.32% -7.6%
2010 8.6% 12.31%

SCHF had its best year in 2017 with an annual return of 25.83%. SCHF’s worst year over the past decade yielded -14.39% and occurred in 2018. In most years the Schwab International Equity ETF provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.88%, 8.6%, and 9.86% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

SCHF vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $17,089 6.43%
ACWI $10,000 $24,255 10.21%

A $10,000 investment in SCHF would have resulted in a final balance of $17,089. This is a profit of $7,089 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.43%.

With a $10,000 investment in ACWI, the end total would have been $24,255. This equates to a $14,255 profit over 10 years and a compound annual growth rate (CAGR) of 10.21%.

SCHF’s CAGR is 3.79 percentage points lower than that of ACWI and as a result, would have yielded $7,166 less on a $10,000 investment. Thus, SCHF performed worse than ACWI by 3.79% annually.


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