SCHG vs. MTUM: What’s The Difference?

The Schwab U.S. Large-Cap Growth ETF (SCHG) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and MTUM is a iShares Large Growth fund. So, what’s the difference between SCHG and MTUM? And which fund is better?

The expense ratio of SCHG is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%). SCHG also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHG has provided higher returns than MTUM over the past 7 years.

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

Summary

SCHG MTUM
Name Schwab U.S. Large-Cap Growth ETF iShares MSCI USA Momentum Factor ETF
Category Large Growth Large Growth
Issuer Schwab ETFs iShares
AUM 15.16B 14.53B
Avg. Return 17.81% 17.37%
Div. Yield 0.43% 0.44%
Expense Ratio 0.04% 0.15%

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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

SCHG’s dividend yield is 0.01% lower than that of MTUM (0.43% vs. 0.44%). Also, SCHG yielded on average 0.44% more per year over the past decade (17.81% vs. 17.37%). The expense ratio of SCHG is 0.11 percentage points lower than MTUM’s (0.04% vs. 0.15%).

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Fund Composition

Industry Exposure

SCHG vs. MTUM - Industry Exposure

SCHG MTUM
Technology 39.21% 15.24%
Industrials 3.01% 12.47%
Energy 0.2% 1.77%
Communication Services 17.07% 13.18%
Utilities 0.0% 0.19%
Healthcare 12.05% 6.41%
Consumer Defensive 2.15% 2.88%
Real Estate 1.64% 0.43%
Financial Services 7.98% 34.32%
Consumer Cyclical 15.01% 9.96%
Basic Materials 1.68% 3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

SCHG is 23.97% more exposed to the Technology sector than MTUM (39.21% vs 15.24%). SCHG’s exposure to Communication Services and Consumer Cyclical stocks is 3.89% higher and 5.05% higher respectively (17.07% vs. 13.18% and 15.01% vs. 9.96%). In total, Energy, Real Estate, and Basic Materials also make up 1.83% less of the fund’s holdings compared to MTUM (3.52% vs. 5.35%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

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Risk Analysis

SCHG MTUM
Mean Return 1.46 0
R-squared 92.92 0
Std. Deviation 14.78 0
Alpha 1.97 0
Beta 1.05 0
Sharpe Ratio 1.14 0
Treynor Ratio 16.3 0

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Beta of 0 with a Alpha of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while MTUM’s Sharpe Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Mean Return of 0.

SCHG’s Mean Return is 1.46 points higher than that of MTUM and its R-squared is 92.92 points higher. With a Standard Deviation of 14.78, SCHG is slightly more volatile than MTUM. The Alpha and Beta of SCHG are 1.97 points higher and 1.05 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

SCHG vs. MTUM - Annual Returns

Year SCHG MTUM
2020 39.13% 29.69%
2019 36.21% 27.57%
2018 -1.35% -1.77%
2017 28.04% 37.6%
2016 6.76% 4.89%
2015 3.26% 9.12%
2014 15.74% 14.48%
2013 33.96% 0.0%
2012 17.02% 0.0%
2011 -0.67% 0.0%
2010 16.83% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

SCHG vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHG $10,000 $30,541 17.81%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in SCHG would have resulted in a final balance of $30,541. This is a profit of $20,541 over 7 years and amounts to a compound annual growth rate (CAGR) of 17.81%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

SCHG’s CAGR is 0.44 percentage points higher than that of MTUM and as a result, would have yielded $1,240 more on a $10,000 investment. Thus, SCHG outperformed MTUM by 0.44% annually.


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