The Schwab International Equity ETF (SCHF) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between SCHF and XLE? And which fund is better?
The expense ratio of SCHF is 0.06 percentage points lower than XLE’s (0.06% vs. 0.12%). SCHF also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHF has provided higher returns than XLE over the past 10 years.
In this article, we’ll compare SCHF vs. XLE. We’ll look at holdings and risk metrics, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss SCHF’s and XLE’s fund composition, annual returns, and performance and examine how these affect their overall returns.
Summary
| SCHF | XLE | |
| Name | Schwab International Equity ETF | Energy Select Sector SPDR Fund |
| Category | Foreign Large Blend | Equity Energy |
| Issuer | Schwab ETFs | SPDR State Street Global Advisors |
| AUM | 26.99B | 25.55B |
| Avg. Return | 6.43% | 1.28% |
| Div. Yield | 2.16% | 3.92% |
| 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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.
SCHF’s dividend yield is 1.76% lower than that of XLE (2.16% vs. 3.92%). Also, SCHF yielded on average 5.15% more per year over the past decade (6.43% vs. 1.28%). The expense ratio of SCHF is 0.06 percentage points lower than XLE’s (0.06% vs. 0.12%).
Fund Composition
Industry Exposure
| SCHF | XLE | |
| Technology | 11.55% | 0.0% |
| Industrials | 14.86% | 0.0% |
| Energy | 4.23% | 100.0% |
| Communication Services | 5.65% | 0.0% |
| 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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 XLE (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%.
| XLE Holdings | Weight |
| Exxon Mobil Corp | 23.7% |
| Chevron Corp | 20.03% |
| ConocoPhillips | 4.64% |
| EOG Resources Inc | 4.46% |
| Schlumberger Ltd | 4.43% |
| Marathon Petroleum Corp | 4.17% |
| Pioneer Natural Resources Co | 4.08% |
| Phillips 66 | 4.07% |
| Kinder Morgan Inc Class P | 3.85% |
| Williams Companies Inc | 3.5% |
XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.
Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.
Risk Analysis
| SCHF | XLE | |
| Mean Return | 0.58 | 0.32 |
| R-squared | 98.16 | 61.84 |
| Std. Deviation | 15.08 | 27.52 |
| Alpha | 0.53 | -11.98 |
| Beta | 0.99 | 1.54 |
| Sharpe Ratio | 0.42 | 0.12 |
| Treynor Ratio | 5.39 | -0.4 |
The Schwab International Equity ETF (SCHF) has a R-squared of 98.16 with a Standard Deviation of 15.08 and a Sharpe Ratio of 0.42. Its Beta is 0.99 while SCHF’s Mean Return is 0.58. Furthermore, the fund has a Alpha of 0.53 and a Treynor Ratio of 5.39.
The Energy Select Sector SPDR Fund (XLE) has a Beta of 1.54 with a Mean Return of 0.32 and a Alpha of -11.98. Its Treynor Ratio is -0.4 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a Sharpe Ratio of 0.12 and a R-squared of 61.84.
SCHF’s Mean Return is 0.26 points higher than that of XLE and its R-squared is 36.32 points higher. With a Standard Deviation of 15.08, SCHF is slightly less volatile than XLE. The Alpha and Beta of SCHF are 12.51 points higher and 0.55 points lower than XLE’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHF | XLE |
| 2020 | 9.86% | -32.56% |
| 2019 | 22.15% | 11.87% |
| 2018 | -14.39% | -18.1% |
| 2017 | 25.83% | -1.01% |
| 2016 | 2.88% | 27.95% |
| 2015 | -2.44% | -21.47% |
| 2014 | -4.44% | -8.61% |
| 2013 | 20.03% | 26.16% |
| 2012 | 17.12% | 5.17% |
| 2011 | -12.32% | 2.98% |
| 2010 | 8.6% | 21.7% |
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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHF | $10,000 | $17,089 | 6.43% |
| XLE | $10,000 | $7,674 | 1.28% |
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 XLE, the end total would have been $7,674. This equates to a $-2,326 profit over 10 years and a compound annual growth rate (CAGR) of 1.28%.
SCHF’s CAGR is 5.15 percentage points higher than that of XLE and as a result, would have yielded $9,415 more on a $10,000 investment. Thus, SCHF outperformed XLE by 5.15% annually.
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