SCHF vs. EMB: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between SCHF and EMB? And which fund is better?

The expense ratio of SCHF is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%). SCHF also has a high exposure to the financial services sector while EMB is mostly comprised of BBB bonds. Overall, SCHF has provided lower returns than EMB over the past 10 years.

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

Summary

SCHF EMB
Name Schwab International Equity ETF iShares J.P. Morgan USD Emerging Markets Bond ETF
Category Foreign Large Blend Emerging Markets Bond
Issuer Schwab ETFs iShares
AUM 26.99B 19.76B
Avg. Return 6.43% 6.43%
Div. Yield 2.16% 3.85%
Expense Ratio 0.06% 0.39%

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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B 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 3.85% with an expense ratio of 0.39%.

SCHF’s dividend yield is 1.69% lower than that of EMB (2.16% vs. 3.85%). Also, SCHF yielded on average 0.01% less per year over the past decade (6.43% vs. 6.43%). The expense ratio of SCHF is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%).

Fund Composition

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%.

EMB - Holdings

EMB Bond Sectors Weight
BBB 33.79%
B 21.97%
BB 16.92%
A 13.67%
AA 7.97%
Below B 4.49%
Others 1.11%
AAA 0.09%
US Government 0.0%

EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.

Risk Analysis

SCHF EMB
Mean Return 0.58 0.44
R-squared 98.16 23.34
Std. Deviation 15.08 8.44
Alpha 0.53 0.89
Beta 0.99 1.36
Sharpe Ratio 0.42 0.55
Treynor Ratio 5.39 3.24

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

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Standard Deviation of 8.44 with a Mean Return of 0.44 and a Beta of 1.36. Its R-squared is 23.34 while EMB’s Alpha is 0.89. Furthermore, the fund has a Sharpe Ratio of 0.55 and a Treynor Ratio of 3.24.

SCHF’s Mean Return is 0.14 points higher than that of EMB and its R-squared is 74.82 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than EMB. The Alpha and Beta of SCHF are 0.36 points lower and 0.37 points lower than EMB’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. EMB - Annual Returns

Year SCHF EMB
2020 9.86% 5.48%
2019 22.15% 15.57%
2018 -14.39% -5.67%
2017 25.83% 9.98%
2016 2.88% 9.41%
2015 -2.44% 0.43%
2014 -4.44% 6.69%
2013 20.03% -7.42%
2012 17.12% 17.64%
2011 -12.32% 7.2%
2010 8.6% 11.47%

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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.

Portfolio Growth

SCHF vs. EMB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $17,089 6.43%
EMB $10,000 $17,309 6.43%

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 EMB, the end total would have been $17,309. This equates to a $7,309 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.

SCHF’s CAGR is 0.01 percentage points lower than that of EMB and as a result, would have yielded $220 less on a $10,000 investment. Thus, SCHF performed worse than EMB by 0.01% annually.


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