SCHF vs. MBB: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between SCHF and MBB? And which fund is better?

SCHF and MBB have the same expense ratio: 0.06%. SCHF also has a high exposure to the financial services sector while MBB is mostly comprised of AAA bonds. Overall, SCHF has provided higher returns than MBB over the past 10 years.

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

Summary

SCHF MBB
Name Schwab International Equity ETF iShares MBS ETF
Category Foreign Large Blend Intermediate Government
Issuer Schwab ETFs iShares
AUM 26.99B 25.69B
Avg. Return 6.43% 3.08%
Div. Yield 2.16% 1.88%
Expense Ratio 0.06% 0.06%

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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

SCHF’s dividend yield is 0.28% higher than that of MBB (2.16% vs. 1.88%). Also, SCHF yielded on average 3.35% more per year over the past decade (6.43% vs. 3.08%). SCHF and MBB have the same expense ratio: 0.06%.

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%.

MBB - Holdings

MBB Bond Sectors Weight
AAA 99.51%
Others 0.49%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 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 MBB
Mean Return 0.58 0.2
R-squared 98.16 74.38
Std. Deviation 15.08 2.12
Alpha 0.53 0.14
Beta 0.99 0.6
Sharpe Ratio 0.42 0.87
Treynor Ratio 5.39 3.02

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

The iShares MBS ETF (MBB) has a Standard Deviation of 2.12 with a Alpha of 0.14 and a R-squared of 74.38. Its Sharpe Ratio is 0.87 while MBB’s Treynor Ratio is 3.02. Furthermore, the fund has a Mean Return of 0.2 and a Beta of 0.6.

SCHF’s Mean Return is 0.38 points higher than that of MBB and its R-squared is 23.78 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than MBB. The Alpha and Beta of SCHF are 0.39 points higher and 0.39 points higher than MBB’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. MBB - Annual Returns

Year SCHF MBB
2020 9.86% 4.03%
2019 22.15% 6.27%
2018 -14.39% 0.81%
2017 25.83% 2.37%
2016 2.88% 1.28%
2015 -2.44% 1.28%
2014 -4.44% 6.16%
2013 20.03% -1.92%
2012 17.12% 2.23%
2011 -12.32% 5.88%
2010 8.6% 5.44%

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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.

Portfolio Growth

SCHF vs. MBB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $17,089 6.43%
MBB $10,000 $13,189 3.08%

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 MBB, the end total would have been $13,189. This equates to a $3,189 profit over 10 years and a compound annual growth rate (CAGR) of 3.08%.

SCHF’s CAGR is 3.35 percentage points higher than that of MBB and as a result, would have yielded $3,900 more on a $10,000 investment. Thus, SCHF outperformed MBB by 3.35% annually.


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