The Schwab International Equity ETF (SCHF) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between SCHF and XLC? And which fund is better?
The expense ratio of SCHF is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%). SCHF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, SCHF has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare SCHF vs. XLC. We’ll look at annual returns and risk metrics, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss SCHF’s and XLC’s performance, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| SCHF | XLC | |
| Name | Schwab International Equity ETF | Communication Services Select Sector SPDR Fund |
| Category | Foreign Large Blend | Communications |
| Issuer | Schwab ETFs | SPDR State Street Global Advisors |
| AUM | 26.99B | 14.09B |
| Avg. Return | 6.43% | 29.04% |
| Div. Yield | 2.16% | 0.62% |
| Expense Ratio | 0.06% | 0.12% |
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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
SCHF’s dividend yield is 1.54% higher than that of XLC (2.16% vs. 0.62%). Also, SCHF yielded on average 22.61% less per year over the past decade (6.43% vs. 29.04%). The expense ratio of SCHF is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%).
Fund Composition
Industry Exposure
| SCHF | XLC | |
| Technology | 11.55% | 0.0% |
| Industrials | 14.86% | 0.0% |
| Energy | 4.23% | 0.0% |
| Communication Services | 5.65% | 100.0% |
| Utilities | 3.09% | 0.0% |
| Healthcare | 11.05% | 0.0% |
| Consumer Defensive | 9.41% | 0.0% |
| Real Estate | 3.17% | 0.0% |
| Financial Services | 17.85% | 0.0% |
| Consumer Cyclical | 10.87% | 0.0% |
| Basic Materials | 8.26% | 0.0% |
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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
SCHF is 17.85% more exposed to the Financial Services sector than XLC (17.85% vs 0.0%). SCHF’s exposure to Industrials and Technology stocks is 14.86% higher and 11.55% higher respectively (14.86% vs. 0.0% and 11.55% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 86.95% less of the fund’s holdings compared to XLC (13.05% vs. 100.00%).
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%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| SCHF | XLC | |
| Mean Return | 0.58 | 0 |
| R-squared | 98.16 | 0 |
| Std. Deviation | 15.08 | 0 |
| Alpha | 0.53 | 0 |
| Beta | 0.99 | 0 |
| Sharpe Ratio | 0.42 | 0 |
| Treynor Ratio | 5.39 | 0 |
The Schwab International Equity ETF (SCHF) has a Alpha of 0.53 with a Beta of 0.99 and a Standard Deviation of 15.08. 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 Communication Services Select Sector SPDR Fund (XLC) has a Beta of 0 with a Alpha of 0 and a Treynor Ratio of 0. Its Mean Return is 0 while XLC’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.
SCHF’s Mean Return is 0.58 points higher than that of XLC and its R-squared is 98.16 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than XLC. The Alpha and Beta of SCHF are 0.53 points higher and 0.99 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHF | XLC |
| 2020 | 9.86% | 26.85% |
| 2019 | 22.15% | 31.22% |
| 2018 | -14.39% | 0.0% |
| 2017 | 25.83% | 0.0% |
| 2016 | 2.88% | 0.0% |
| 2015 | -2.44% | 0.0% |
| 2014 | -4.44% | 0.0% |
| 2013 | 20.03% | 0.0% |
| 2012 | 17.12% | 0.0% |
| 2011 | -12.32% | 0.0% |
| 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 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHF | $10,000 | $13,419 | 6.43% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in SCHF would have resulted in a final balance of $13,419. This is a profit of $3,419 over 2 years and amounts to a compound annual growth rate (CAGR) of 6.43%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
SCHF’s CAGR is 22.61 percentage points lower than that of XLC and as a result, would have yielded $3,226 less on a $10,000 investment. Thus, SCHF performed worse than XLC by 22.61% annually.
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