The Schwab International Equity ETF (SCHF) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between SCHF and SCHP? And which fund is better?
The expense ratio of SCHF is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%). SCHF also has a high exposure to the financial services sector while SCHP is mostly comprised of AAA bonds. Overall, SCHF has provided higher returns than SCHP over the past 10 years.
In this article, we’ll compare SCHF vs. SCHP. We’ll look at annual returns and fund composition, as well as at their industry exposure and holdings. Moreover, I’ll also discuss SCHF’s and SCHP’s performance, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| SCHF | SCHP | |
| Name | Schwab International Equity ETF | Schwab U.S. TIPS ETF |
| Category | Foreign Large Blend | Inflation-Protected Bond |
| Issuer | Schwab ETFs | Schwab ETFs |
| AUM | 26.99B | 18.41B |
| Avg. Return | 6.43% | 3.92% |
| Div. Yield | 2.16% | 1.97% |
| 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 Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
SCHF’s dividend yield is 0.19% higher than that of SCHP (2.16% vs. 1.97%). Also, SCHF yielded on average 2.51% more per year over the past decade (6.43% vs. 3.92%). The expense ratio of SCHF is 0.01 percentage points higher than SCHP’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%.
| SCHP 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% |
SCHP’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 | SCHP | |
| Mean Return | 0.58 | 0.28 |
| R-squared | 98.16 | 66.16 |
| Std. Deviation | 15.08 | 4.32 |
| Alpha | 0.53 | -0.5 |
| Beta | 0.99 | 1.17 |
| Sharpe Ratio | 0.42 | 0.64 |
| Treynor Ratio | 5.39 | 2.31 |
The Schwab International Equity ETF (SCHF) has a Mean Return of 0.58 with a Treynor Ratio of 5.39 and a R-squared of 98.16. Its Beta is 0.99 while SCHF’s Sharpe Ratio is 0.42. Furthermore, the fund has a Alpha of 0.53 and a Standard Deviation of 15.08.
The Schwab U.S. TIPS ETF (SCHP) has a Alpha of -0.5 with a Beta of 1.17 and a Mean Return of 0.28. Its Sharpe Ratio is 0.64 while SCHP’s Treynor Ratio is 2.31. Furthermore, the fund has a R-squared of 66.16 and a Standard Deviation of 4.32.
SCHF’s Mean Return is 0.30 points higher than that of SCHP and its R-squared is 32.00 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than SCHP. The Alpha and Beta of SCHF are 1.03 points higher and 0.18 points lower than SCHP’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHF | SCHP |
| 2020 | 9.86% | 10.94% |
| 2019 | 22.15% | 8.36% |
| 2018 | -14.39% | -1.31% |
| 2017 | 25.83% | 2.95% |
| 2016 | 2.88% | 4.6% |
| 2015 | -2.44% | -1.5% |
| 2014 | -4.44% | 3.56% |
| 2013 | 20.03% | -8.66% |
| 2012 | 17.12% | 6.83% |
| 2011 | -12.32% | 13.38% |
| 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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHF | $10,000 | $17,089 | 6.43% |
| SCHP | $10,000 | $14,418 | 3.92% |
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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
SCHF’s CAGR is 2.51 percentage points higher than that of SCHP and as a result, would have yielded $2,671 more on a $10,000 investment. Thus, SCHF outperformed SCHP by 2.51% annually.
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