The Schwab International Equity ETF (SCHF) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between SCHF and GOVT? And which fund is better?
The expense ratio of SCHF is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%). SCHF also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, SCHF has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare SCHF vs. GOVT. We’ll look at portfolio growth and annual returns, as well as at their holdings and risk metrics. Moreover, I’ll also discuss SCHF’s and GOVT’s performance, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| SCHF | GOVT | |
| Name | Schwab International Equity ETF | iShares U.S. Treasury Bond ETF |
| Category | Foreign Large Blend | Intermediate Government |
| Issuer | Schwab ETFs | iShares |
| AUM | 26.99B | 17.07B |
| Avg. Return | 6.43% | 2.67% |
| Div. Yield | 2.16% | 1.0% |
| Expense Ratio | 0.06% | 0.05% |
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 U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
SCHF’s dividend yield is 1.16% higher than that of GOVT (2.16% vs. 1.0%). Also, SCHF yielded on average 3.75% more per year over the past decade (6.43% vs. 2.67%). The expense ratio of SCHF is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%).
Fund Composition
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%.
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| SCHF | GOVT | |
| Mean Return | 0.58 | 0 |
| R-squared | 98.16 | 0 |
| Std. Deviation | 15.08 | 0 |
| Alpha | 0.53 | 0 |
| Beta | 0.99 | 0 |
| Sharpe Ratio | 0.42 | 0 |
| Treynor Ratio | 5.39 | 0 |
The Schwab International Equity ETF (SCHF) has a Alpha of 0.53 with a Beta of 0.99 and a Mean Return of 0.58. Its Sharpe Ratio is 0.42 while SCHF’s R-squared is 98.16. Furthermore, the fund has a Treynor Ratio of 5.39 and a Standard Deviation of 15.08.
The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while GOVT’s Treynor Ratio is 0. Furthermore, the fund has a Beta of 0 and a Standard Deviation of 0.
SCHF’s Mean Return is 0.58 points higher than that of GOVT and its R-squared is 98.16 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than GOVT. The Alpha and Beta of SCHF are 0.53 points higher and 0.99 points higher than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHF | GOVT |
| 2020 | 9.86% | 7.92% |
| 2019 | 22.15% | 6.71% |
| 2018 | -14.39% | 0.74% |
| 2017 | 25.83% | 2.19% |
| 2016 | 2.88% | 0.92% |
| 2015 | -2.44% | 0.76% |
| 2014 | -4.44% | 4.99% |
| 2013 | 20.03% | -2.84% |
| 2012 | 17.12% | 0.0% |
| 2011 | -12.32% | 0.0% |
| 2010 | 8.6% | 0.0% |
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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHF | $10,000 | $16,642 | 6.43% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in SCHF would have resulted in a final balance of $16,642. This is a profit of $6,642 over 8 years and amounts to a compound annual growth rate (CAGR) of 6.43%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
SCHF’s CAGR is 3.75 percentage points higher than that of GOVT and as a result, would have yielded $4,345 more on a $10,000 investment. Thus, SCHF outperformed GOVT by 3.75% annually.
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