The Schwab U.S. Large-Cap Growth ETF (SCHG) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between SCHG and TLT? And which fund is better?
The expense ratio of SCHG is 0.11 percentage points lower than TLT’s (0.04% vs. 0.15%). SCHG also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, SCHG has provided higher returns than TLT over the past 10 years.
In this article, we’ll compare SCHG vs. TLT. We’ll look at holdings and annual returns, as well as at their industry exposure and performance. Moreover, I’ll also discuss SCHG’s and TLT’s risk metrics, portfolio growth, and fund composition and examine how these affect their overall returns.
Summary
| SCHG | TLT | |
| Name | Schwab U.S. Large-Cap Growth ETF | iShares 20+ Year Treasury Bond ETF |
| Category | Large Growth | Long Government |
| Issuer | Schwab ETFs | iShares |
| AUM | 15.16B | 15.15B |
| Avg. Return | 17.81% | 9.00% |
| Div. Yield | 0.43% | 1.5% |
| 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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
SCHG’s dividend yield is 1.07% lower than that of TLT (0.43% vs. 1.5%). Also, SCHG yielded on average 8.81% more per year over the past decade (17.81% vs. 9.00%). The expense ratio of SCHG is 0.11 percentage points lower than TLT’s (0.04% vs. 0.15%).
Fund Composition
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%.
| TLT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TLT’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.
Risk Analysis
| SCHG | TLT | |
| Mean Return | 1.46 | 0.63 |
| R-squared | 92.92 | 68.76 |
| Std. Deviation | 14.78 | 12.76 |
| Alpha | 1.97 | -2.83 |
| Beta | 1.05 | 3.54 |
| Sharpe Ratio | 1.14 | 0.55 |
| Treynor Ratio | 16.3 | 1.82 |
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Alpha of 1.97 with a Standard Deviation of 14.78 and a Mean Return of 1.46. Its Treynor Ratio is 16.3 while SCHG’s Beta is 1.05. Furthermore, the fund has a Sharpe Ratio of 1.14 and a R-squared of 92.92.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a Standard Deviation of 12.76 and a Treynor Ratio of 1.82. Its Beta is 3.54 while TLT’s Sharpe Ratio is 0.55. Furthermore, the fund has a Alpha of -2.83 and a R-squared of 68.76.
SCHG’s Mean Return is 0.83 points higher than that of TLT and its R-squared is 24.16 points higher. With a Standard Deviation of 14.78, SCHG is slightly more volatile than TLT. The Alpha and Beta of SCHG are 4.80 points higher and 2.49 points lower than TLT’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHG | TLT |
| 2020 | 39.13% | 17.92% |
| 2019 | 36.21% | 14.93% |
| 2018 | -1.35% | -2.07% |
| 2017 | 28.04% | 8.92% |
| 2016 | 6.76% | 1.36% |
| 2015 | 3.26% | -1.65% |
| 2014 | 15.74% | 27.35% |
| 2013 | 33.96% | -13.91% |
| 2012 | 17.02% | 3.25% |
| 2011 | -0.67% | 33.6% |
| 2010 | 16.83% | 9.25% |
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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHG | $10,000 | $47,556 | 17.81% |
| TLT | $10,000 | $21,793 | 9.00% |
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 TLT, the end total would have been $21,793. This equates to a $11,793 profit over 10 years and a compound annual growth rate (CAGR) of 9.00%.
SCHG’s CAGR is 8.81 percentage points higher than that of TLT and as a result, would have yielded $25,763 more on a $10,000 investment. Thus, SCHG outperformed TLT by 8.81% annually.
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