The Schwab International Equity ETF (SCHF) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between SCHF and TLT? And which fund is better?
The expense ratio of SCHF is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%). SCHF also has a high exposure to the financial services sector while TLT is mostly comprised of AAA bonds. Overall, SCHF has provided lower returns than TLT over the past 10 years.
In this article, we’ll compare SCHF vs. TLT. We’ll look at risk metrics and holdings, as well as at their performance and annual returns. Moreover, I’ll also discuss SCHF’s and TLT’s industry exposure, fund composition, and portfolio growth and examine how these affect their overall returns.
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Summary
| SCHF | TLT | |
| Name | Schwab International Equity ETF | iShares 20+ Year Treasury Bond ETF |
| Category | Foreign Large Blend | Long Government |
| Issuer | Schwab ETFs | iShares |
| AUM | 26.99B | 15.15B |
| Avg. Return | 6.43% | 9.00% |
| Div. Yield | 2.16% | 1.5% |
| Expense Ratio | 0.06% | 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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
SCHF’s dividend yield is 0.66% higher than that of TLT (2.16% vs. 1.5%). Also, SCHF yielded on average 2.57% less per year over the past decade (6.43% vs. 9.00%). The expense ratio of SCHF is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%).
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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%.
| TLT 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% |
TLT’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 | TLT | |
| Mean Return | 0.58 | 0.63 |
| R-squared | 98.16 | 68.76 |
| Std. Deviation | 15.08 | 12.76 |
| Alpha | 0.53 | -2.83 |
| Beta | 0.99 | 3.54 |
| Sharpe Ratio | 0.42 | 0.55 |
| Treynor Ratio | 5.39 | 1.82 |
The Schwab International Equity ETF (SCHF) has a Beta of 0.99 with a Treynor Ratio of 5.39 and a R-squared of 98.16. Its Mean Return is 0.58 while SCHF’s Standard Deviation is 15.08. Furthermore, the fund has a Alpha of 0.53 and a Sharpe Ratio of 0.42.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Beta of 3.54 with a Treynor Ratio of 1.82 and a Mean Return of 0.63. Its Alpha is -2.83 while TLT’s Sharpe Ratio is 0.55. Furthermore, the fund has a Standard Deviation of 12.76 and a R-squared of 68.76.
SCHF’s Mean Return is 0.05 points lower than that of TLT and its R-squared is 29.40 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than TLT. The Alpha and Beta of SCHF are 3.36 points higher and 2.55 points lower than TLT’s Alpha and Beta.
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Performance
Annual Returns
| Year | SCHF | TLT |
| 2020 | 9.86% | 17.92% |
| 2019 | 22.15% | 14.93% |
| 2018 | -14.39% | -2.07% |
| 2017 | 25.83% | 8.92% |
| 2016 | 2.88% | 1.36% |
| 2015 | -2.44% | -1.65% |
| 2014 | -4.44% | 27.35% |
| 2013 | 20.03% | -13.91% |
| 2012 | 17.12% | 3.25% |
| 2011 | -12.32% | 33.6% |
| 2010 | 8.6% | 9.25% |
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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHF | $10,000 | $17,089 | 6.43% |
| TLT | $10,000 | $21,793 | 9.00% |
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 TLT, the end total would have been $21,793. This equates to a $11,793 profit over 10 years and a compound annual growth rate (CAGR) of 9.00%.
SCHF’s CAGR is 2.57 percentage points lower than that of TLT and as a result, would have yielded $4,704 less on a $10,000 investment. Thus, SCHF performed worse than TLT by 2.57% annually.
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