The Schwab International Equity ETF (SCHF) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between SCHF and IEF? And which fund is better?

The expense ratio of SCHF is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%). SCHF also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, SCHF has provided higher returns than IEF over the past 10 years.

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

Summary

SCHFIEF
NameSchwab International Equity ETFiShares 7-10 Year Treasury Bond ETF
CategoryForeign Large BlendLong Government
IssuerSchwab ETFsiShares
AUM26.99B13.44B
Avg. Return6.43%5.06%
Div. Yield2.16%0.84%
Expense Ratio0.06%0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

SCHF’s dividend yield is 1.32% higher than that of IEF (2.16% vs. 0.84%). Also, SCHF yielded on average 1.37% more per year over the past decade (6.43% vs. 5.06%). The expense ratio of SCHF is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%).

Fund Composition

Holdings

SCHF - Holdings

SCHF HoldingsWeight
Nestle SA1.66%
Samsung Electronics Co Ltd1.6%
ASML Holding NV1.29%
Roche Holding AG1.24%
Toyota Motor Corp1.02%
LVMH Moet Hennessy Louis Vuitton SE0.93%
Novartis AG0.92%
Shopify Inc A0.78%
AstraZeneca PLC0.75%
SAP SE0.74%

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%.

IEF - Holdings

IEF Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

IEF’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

SCHFIEF
Mean Return0.580.32
R-squared98.1677.56
Std. Deviation15.085.42
Alpha0.53-1.2
Beta0.991.59
Sharpe Ratio0.420.6
Treynor Ratio5.391.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Treynor Ratio of 1.97 with a Mean Return of 0.32 and a Sharpe Ratio of 0.6. Its Standard Deviation is 5.42 while IEF’s Alpha is -1.2. Furthermore, the fund has a R-squared of 77.56 and a Beta of 1.59.

SCHF’s Mean Return is 0.26 points higher than that of IEF and its R-squared is 20.60 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than IEF. The Alpha and Beta of SCHF are 1.73 points higher and 0.60 points lower than IEF’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. IEF - Annual Returns

YearSCHFIEF
20209.86%9.84%
201922.15%8.38%
2018-14.39%0.82%
201725.83%2.47%
20162.88%1.0%
2015-2.44%1.55%
2014-4.44%8.92%
201320.03%-6.12%
201217.12%4.06%
2011-12.32%15.46%
20108.6%9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

SCHF vs. IEF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHF$10,000$17,0896.43%
IEF$10,000$15,4975.06%

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 IEF, the end total would have been $15,497. This equates to a $5,497 profit over 10 years and a compound annual growth rate (CAGR) of 5.06%.

SCHF’s CAGR is 1.37 percentage points higher than that of IEF and as a result, would have yielded $1,592 more on a $10,000 investment. Thus, SCHF outperformed IEF by 1.37% annually.

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