SCHF vs. XLY: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between SCHF and XLY? And which fund is better?

The expense ratio of SCHF is 0.06 percentage points lower than XLY’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 lower returns than XLY over the past 10 years.

In this article, we’ll compare SCHF vs. XLY. We’ll look at annual returns and portfolio growth, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss SCHF’s and XLY’s fund composition, performance, and holdings and examine how these affect their overall returns.

Summary

SCHF XLY
Name Schwab International Equity ETF Consumer Discretionary Select Sector SPDR Fund
Category Foreign Large Blend Consumer Cyclical
Issuer Schwab ETFs SPDR State Street Global Advisors
AUM 26.99B 20.21B
Avg. Return 6.43% 18.86%
Div. Yield 2.16% 0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

SCHF’s dividend yield is 1.53% higher than that of XLY (2.16% vs. 0.63%). Also, SCHF yielded on average 12.43% less per year over the past decade (6.43% vs. 18.86%). The expense ratio of SCHF is 0.06 percentage points lower than XLY’s (0.06% vs. 0.12%).

Fund Composition

Industry Exposure

SCHF vs. XLY - Industry Exposure

SCHF XLY
Technology 11.55% 0.57%
Industrials 14.86% 0.0%
Energy 4.23% 0.0%
Communication Services 5.65% 0.0%
Utilities 3.09% 0.0%
Healthcare 11.05% 0.0%
Consumer Defensive 9.41% 5.34%
Real Estate 3.17% 0.0%
Financial Services 17.85% 0.0%
Consumer Cyclical 10.87% 94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

SCHF is 17.85% more exposed to the Financial Services sector than XLY (17.85% vs 0.0%). SCHF’s exposure to Industrials and Technology stocks is 14.86% higher and 10.98% higher respectively (14.86% vs. 0.0% and 11.55% vs. 0.57%). In total, Real Estate, Energy, and Communication Services also make up 13.05% more of the fund’s holdings compared to XLY (13.05% vs. 0.00%).

Holdings

SCHF - 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%.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

Risk Analysis

SCHF XLY
Mean Return 0.58 1.47
R-squared 98.16 80.84
Std. Deviation 15.08 15.97
Alpha 0.53 6.96
Beta 0.99 1.02
Sharpe Ratio 0.42 1.06
Treynor Ratio 5.39 16.69

The Schwab International Equity ETF (SCHF) has a Mean Return of 0.58 with a Beta of 0.99 and a Alpha of 0.53. Its Treynor Ratio is 5.39 while SCHF’s R-squared is 98.16. Furthermore, the fund has a Standard Deviation of 15.08 and a Sharpe Ratio of 0.42.

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Alpha of 6.96 with a Beta of 1.02 and a Treynor Ratio of 16.69. Its Sharpe Ratio is 1.06 while XLY’s Mean Return is 1.47. Furthermore, the fund has a R-squared of 80.84 and a Standard Deviation of 15.97.

SCHF’s Mean Return is 0.89 points lower than that of XLY and its R-squared is 17.32 points higher. With a Standard Deviation of 15.08, SCHF is slightly less volatile than XLY. The Alpha and Beta of SCHF are 6.43 points lower and 0.03 points lower than XLY’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. XLY - Annual Returns

Year SCHF XLY
2020 9.86% 29.66%
2019 22.15% 28.43%
2018 -14.39% 1.66%
2017 25.83% 22.77%
2016 2.88% 5.87%
2015 -2.44% 9.93%
2014 -4.44% 9.49%
2013 20.03% 42.74%
2012 17.12% 23.6%
2011 -12.32% 5.98%
2010 8.6% 27.36%

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 2013 was the strongest year for XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

SCHF vs. XLY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $17,089 6.43%
XLY $10,000 $49,518 18.86%

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 XLY, the end total would have been $49,518. This equates to a $39,518 profit over 10 years and a compound annual growth rate (CAGR) of 18.86%.

SCHF’s CAGR is 12.43 percentage points lower than that of XLY and as a result, would have yielded $32,429 less on a $10,000 investment. Thus, SCHF performed worse than XLY by 12.43% annually.


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