SCHG vs. IWN: What’s The Difference?

The Schwab U.S. Large-Cap Growth ETF (SCHG) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and IWN is a iShares Small Value fund. So, what’s the difference between SCHG and IWN? And which fund is better?

The expense ratio of SCHG is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%). SCHG also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHG has provided higher returns than IWN over the past 10 years.

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

Summary

SCHG IWN
Name Schwab U.S. Large-Cap Growth ETF iShares Russell 2000 Value ETF
Category Large Growth Small Value
Issuer Schwab ETFs iShares
AUM 15.16B 15.48B
Avg. Return 17.81% 10.96%
Div. Yield 0.43% 1.26%
Expense Ratio 0.04% 0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

SCHG’s dividend yield is 0.83% lower than that of IWN (0.43% vs. 1.26%). Also, SCHG yielded on average 6.85% more per year over the past decade (17.81% vs. 10.96%). The expense ratio of SCHG is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%).

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Fund Composition

Industry Exposure

SCHG vs. IWN - Industry Exposure

SCHG IWN
Technology 39.21% 6.02%
Industrials 3.01% 14.58%
Energy 0.2% 5.84%
Communication Services 17.07% 4.17%
Utilities 0.0% 4.69%
Healthcare 12.05% 10.94%
Consumer Defensive 2.15% 3.77%
Real Estate 1.64% 14.36%
Financial Services 7.98% 22.97%
Consumer Cyclical 15.01% 8.39%
Basic Materials 1.68% 4.29%

The Schwab U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

The iShares Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

SCHG is 33.19% more exposed to the Technology sector than IWN (39.21% vs 6.02%). SCHG’s exposure to Communication Services and Consumer Cyclical stocks is 12.90% higher and 6.62% higher respectively (17.07% vs. 4.17% and 15.01% vs. 8.39%). In total, Energy, Real Estate, and Basic Materials also make up 20.97% less of the fund’s holdings compared to IWN (3.52% vs. 24.49%).

Holdings

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
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%.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

SCHG IWN
Mean Return 1.46 1.01
R-squared 92.92 72.64
Std. Deviation 14.78 19.28
Alpha 1.97 -6.32
Beta 1.05 1.21
Sharpe Ratio 1.14 0.59
Treynor Ratio 16.3 8.3

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Treynor Ratio of 16.3 with a R-squared of 92.92 and a Alpha of 1.97. Its Standard Deviation is 14.78 while SCHG’s Beta is 1.05. Furthermore, the fund has a Mean Return of 1.46 and a Sharpe Ratio of 1.14.

The iShares Russell 2000 Value ETF (IWN) has a R-squared of 72.64 with a Mean Return of 1.01 and a Sharpe Ratio of 0.59. Its Standard Deviation is 19.28 while IWN’s Treynor Ratio is 8.3. Furthermore, the fund has a Alpha of -6.32 and a Beta of 1.21.

SCHG’s Mean Return is 0.45 points higher than that of IWN and its R-squared is 20.28 points higher. With a Standard Deviation of 14.78, SCHG is slightly less volatile than IWN. The Alpha and Beta of SCHG are 8.29 points higher and 0.16 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

SCHG vs. IWN - Annual Returns

Year SCHG IWN
2020 39.13% 4.5%
2019 36.21% 22.17%
2018 -1.35% -12.94%
2017 28.04% 7.73%
2016 6.76% 31.64%
2015 3.26% -7.53%
2014 15.74% 4.13%
2013 33.96% 34.3%
2012 17.02% 17.92%
2011 -0.67% -5.64%
2010 16.83% 24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

SCHG vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHG $10,000 $47,556 17.81%
IWN $10,000 $22,680 10.96%

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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.

SCHG’s CAGR is 6.85 percentage points higher than that of IWN and as a result, would have yielded $24,876 more on a $10,000 investment. Thus, SCHG outperformed IWN by 6.85% annually.


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