The Schwab U.S. Large-Cap Growth ETF (SCHG) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. SCHG is a Schwab ETFs Large Growth fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between SCHG and XLC? And which fund is better?
The expense ratio of SCHG is 0.08 percentage points lower than XLC’s (0.04% vs. 0.12%). SCHG also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHG has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare SCHG vs. XLC. We’ll look at portfolio growth and risk metrics, as well as at their fund composition and annual returns. Moreover, I’ll also discuss SCHG’s and XLC’s performance, holdings, and industry exposure and examine how these affect their overall returns.
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Summary
| SCHG | XLC | |
| Name | Schwab U.S. Large-Cap Growth ETF | Communication Services Select Sector SPDR Fund |
| Category | Large Growth | Communications |
| Issuer | Schwab ETFs | SPDR State Street Global Advisors |
| AUM | 15.16B | 14.09B |
| Avg. Return | 17.81% | 29.04% |
| Div. Yield | 0.43% | 0.62% |
| Expense Ratio | 0.04% | 0.12% |
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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
SCHG’s dividend yield is 0.19% lower than that of XLC (0.43% vs. 0.62%). Also, SCHG yielded on average 11.22% less per year over the past decade (17.81% vs. 29.04%). The expense ratio of SCHG is 0.08 percentage points lower than XLC’s (0.04% vs. 0.12%).
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Fund Composition
Industry Exposure
| SCHG | XLC | |
| Technology | 39.21% | 0.0% |
| Industrials | 3.01% | 0.0% |
| Energy | 0.2% | 0.0% |
| Communication Services | 17.07% | 100.0% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 12.05% | 0.0% |
| Consumer Defensive | 2.15% | 0.0% |
| Real Estate | 1.64% | 0.0% |
| Financial Services | 7.98% | 0.0% |
| Consumer Cyclical | 15.01% | 0.0% |
| Basic Materials | 1.68% | 0.0% |
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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
SCHG is 39.21% more exposed to the Technology sector than XLC (39.21% vs 0.0%). SCHG’s exposure to Communication Services and Consumer Cyclical stocks is 82.93% lower and 15.01% higher respectively (17.07% vs. 100.0% and 15.01% vs. 0.0%). In total, Energy, Real Estate, and Basic Materials also make up 3.52% more of the fund’s holdings compared to XLC (3.52% vs. 0.00%).
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%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| SCHG | XLC | |
| 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 R-squared of 92.92 and a Beta of 1.05. Its Sharpe Ratio is 1.14 while SCHG’s Mean Return is 1.46. Furthermore, the fund has a Standard Deviation of 14.78 and a Treynor Ratio of 16.3.
The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Beta of 0. Its Alpha is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.
SCHG’s Mean Return is 1.46 points higher than that of XLC and its R-squared is 92.92 points higher. With a Standard Deviation of 14.78, SCHG is slightly more volatile than XLC. The Alpha and Beta of SCHG are 1.97 points higher and 1.05 points higher than XLC’s Alpha and Beta.
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Performance
Annual Returns
| Year | SCHG | XLC |
| 2020 | 39.13% | 26.85% |
| 2019 | 36.21% | 31.22% |
| 2018 | -1.35% | 0.0% |
| 2017 | 28.04% | 0.0% |
| 2016 | 6.76% | 0.0% |
| 2015 | 3.26% | 0.0% |
| 2014 | 15.74% | 0.0% |
| 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 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHG | $10,000 | $18,950 | 17.81% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in SCHG would have resulted in a final balance of $18,950. This is a profit of $8,950 over 2 years and amounts to a compound annual growth rate (CAGR) of 17.81%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
SCHG’s CAGR is 11.22 percentage points lower than that of XLC and as a result, would have yielded $2,305 more on a $10,000 investment. Thus, SCHG performed worse than XLC by 11.22% annually.
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