The Schwab International Equity ETF (SCHF) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between SCHF and PFF? And which fund is better?
The expense ratio of SCHF is 0.40 percentage points lower than PFF’s (0.06% vs. 0.46%). SCHF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, SCHF has provided lower returns than PFF over the past 10 years.
In this article, we’ll compare SCHF vs. PFF. We’ll look at portfolio growth and annual returns, as well as at their industry exposure and performance. Moreover, I’ll also discuss SCHF’s and PFF’s holdings, risk metrics, and fund composition and examine how these affect their overall returns.
|Name||Schwab International Equity ETF||iShares Preferred and Income Securities ETF|
|Category||Foreign Large Blend||Preferred Stock|
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
SCHF’s dividend yield is 2.31% lower than that of PFF (2.16% vs. 4.47%). Also, SCHF yielded on average 0.47% less per year over the past decade (6.43% vs. 6.90%). The expense ratio of SCHF is 0.40 percentage points lower than PFF’s (0.06% vs. 0.46%).
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 Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
SCHF is 17.85% more exposed to the Financial Services sector than PFF (17.85% vs 0.0%). SCHF’s exposure to Industrials and Technology stocks is 4.59% higher and 11.55% higher respectively (14.86% vs. 10.27% and 11.55% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 12.40% more of the fund’s holdings compared to PFF (13.05% vs. 0.65%).
|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%|
|Shopify Inc A||0.78%|
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%.
|Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A||2.54%|
|BlackRock Cash Funds Treasury SL Agency||2.3%|
|Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-||1.79%|
|Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-||1.49%|
|ArcelorMittal S.A. 5.5%||1.36%|
|Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A||1.35%|
|Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B||1.14%|
|NextEra Energy Inc Unit||1.12%|
|Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4||1.08%|
|Avantor Inc Ser A||0.99%|
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
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 R-squared is 98.16. Furthermore, the fund has a Sharpe Ratio of 0.42 and a Mean Return of 0.58.
The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a Mean Return of 0.52 and a Alpha of 3.45. Its Beta is 0.81 while PFF’s Standard Deviation is 7.87. Furthermore, the fund has a R-squared of 9.39 and a Treynor Ratio of 6.79.
SCHF’s Mean Return is 0.06 points higher than that of PFF and its R-squared is 88.77 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than PFF. The Alpha and Beta of SCHF are 2.92 points lower and 0.18 points higher than PFF’s Alpha and Beta.
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 PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 PFF, the end total would have been $17,789. This equates to a $7,789 profit over 10 years and a compound annual growth rate (CAGR) of 6.90%.
SCHF’s CAGR is 0.47 percentage points lower than that of PFF and as a result, would have yielded $700 less on a $10,000 investment. Thus, SCHF performed worse than PFF by 0.47% annually.
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