The Schwab U.S. Large-Cap Growth ETF (SCHG) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and IEF is a iShares Long Government fund. So, what’s the difference between SCHG and IEF? And which fund is better?
The expense ratio of SCHG is 0.11 percentage points lower than IEF’s (0.04% vs. 0.15%). SCHG also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, SCHG has provided higher returns than IEF over the past 10 years.
In this article, we’ll compare SCHG vs. IEF. We’ll look at portfolio growth and annual returns, as well as at their performance and industry exposure. Moreover, I’ll also discuss SCHG’s and IEF’s risk metrics, fund composition, and holdings and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap Growth ETF||iShares 7-10 Year Treasury Bond ETF|
|Category||Large Growth||Long Government|
The Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
The iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
SCHG’s dividend yield is 0.41% lower than that of IEF (0.43% vs. 0.84%). Also, SCHG yielded on average 12.75% more per year over the past decade (17.81% vs. 5.06%). The expense ratio of SCHG is 0.11 percentage points lower than IEF’s (0.04% vs. 0.15%).
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|Facebook Inc A||4.45%|
|Alphabet Inc A||3.93%|
|Alphabet Inc Class C||3.82%|
|Visa Inc Class A||2.12%|
|UnitedHealth Group Inc||2.02%|
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
|IEF Bond Sectors||Weight|
IEF’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.
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The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a Sharpe Ratio of 1.14 and a Alpha of 1.97. Its R-squared is 92.92 while SCHG’s Standard Deviation is 14.78. Furthermore, the fund has a Treynor Ratio of 16.3 and a Beta of 1.05.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a R-squared of 77.56 with a Sharpe Ratio of 0.6 and a Treynor Ratio of 1.97. Its Mean Return is 0.32 while IEF’s Beta is 1.59. Furthermore, the fund has a Alpha of -1.2 and a Standard Deviation of 5.42.
SCHG’s Mean Return is 1.14 points higher than that of IEF and its R-squared is 15.36 points higher. With a Standard Deviation of 14.78, SCHG is slightly more volatile than IEF. The Alpha and Beta of SCHG are 3.17 points higher and 0.54 points lower than IEF’s Alpha and Beta.
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SCHG had its best year in 2020 with an annual return of 39.13%. SCHG’s worst year over the past decade yielded -1.35% and occurred in 2018. In most years the Schwab U.S. Large-Cap Growth ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 15.74%, 16.83%, and 17.02% respectively.
The year 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SCHG would have resulted in a final balance of $47,556. This is a profit of $37,556 over 10 years and amounts to a compound annual growth rate (CAGR) of 17.81%.
With a $10,000 investment in IEF, the end total would have been $15,497. This equates to a $5,497 profit over 10 years and a compound annual growth rate (CAGR) of 5.06%.
SCHG’s CAGR is 12.75 percentage points higher than that of IEF and as a result, would have yielded $32,059 more on a $10,000 investment. Thus, SCHG outperformed IEF by 12.75% annually.
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