The Schwab U.S. TIPS ETF (SCHP) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and ACWI is a iShares N/A fund. So, what’s the difference between SCHP and ACWI? And which fund is better?
The expense ratio of SCHP is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%). SCHP is mostly comprised of AAA bonds while ACWI has a high exposure to the technology sector. Overall, SCHP has provided lower returns than ACWI over the past 10 years.
In this article, we’ll compare SCHP vs. ACWI. We’ll look at performance and industry exposure, as well as at their holdings and annual returns. Moreover, I’ll also discuss SCHP’s and ACWI’s portfolio growth, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| SCHP | ACWI | |
| Name | Schwab U.S. TIPS ETF | iShares MSCI ACWI ETF |
| Category | Inflation-Protected Bond | N/A |
| Issuer | Schwab ETFs | iShares |
| AUM | 18.41B | 16.85B |
| Avg. Return | 3.92% | 10.21% |
| Div. Yield | 1.97% | 1.39% |
| Expense Ratio | 0.05% | 0.32% |
The Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
SCHP’s dividend yield is 0.58% higher than that of ACWI (1.97% vs. 1.39%). Also, SCHP yielded on average 6.30% less per year over the past decade (3.92% vs. 10.21%). The expense ratio of SCHP is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%).
Fund Composition
Holdings
| SCHP 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% |
SCHP’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.
| ACWI Holdings | Weight |
| Apple Inc | 3.44% |
| Microsoft Corp | 2.91% |
| Amazon.com Inc | 2.21% |
| Facebook Inc A | 1.25% |
| Alphabet Inc Class C | 1.12% |
| Alphabet Inc A | 1.09% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.79% |
| Tesla Inc | 0.78% |
| NVIDIA Corp | 0.74% |
| JPMorgan Chase & Co | 0.71% |
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
Risk Analysis
| SCHP | ACWI | |
| Mean Return | 0.28 | 0.89 |
| R-squared | 66.16 | 99.96 |
| Std. Deviation | 4.32 | 14.05 |
| Alpha | -0.5 | 0.15 |
| Beta | 1.17 | 1 |
| Sharpe Ratio | 0.64 | 0.71 |
| Treynor Ratio | 2.31 | 9.45 |
The Schwab U.S. TIPS ETF (SCHP) has a Alpha of -0.5 with a R-squared of 66.16 and a Sharpe Ratio of 0.64. Its Beta is 1.17 while SCHP’s Treynor Ratio is 2.31. Furthermore, the fund has a Standard Deviation of 4.32 and a Mean Return of 0.28.
The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a Standard Deviation of 14.05 and a Alpha of 0.15. Its R-squared is 99.96 while ACWI’s Beta is 1. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Treynor Ratio of 9.45.
SCHP’s Mean Return is 0.61 points lower than that of ACWI and its R-squared is 33.80 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than ACWI. The Alpha and Beta of SCHP are 0.65 points lower and 0.17 points higher than ACWI’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHP | ACWI |
| 2020 | 10.94% | 16.38% |
| 2019 | 8.36% | 26.7% |
| 2018 | -1.31% | -9.15% |
| 2017 | 2.95% | 24.35% |
| 2016 | 4.6% | 8.22% |
| 2015 | -1.5% | -2.39% |
| 2014 | 3.56% | 4.64% |
| 2013 | -8.66% | 22.91% |
| 2012 | 6.83% | 15.99% |
| 2011 | 13.38% | -7.6% |
| 2010 | 0.0% | 12.31% |
SCHP had its best year in 2011 with an annual return of 13.38%. SCHP’s worst year over the past decade yielded -8.66% and occurred in 2013. In most years the Schwab U.S. TIPS ETF provided moderate returns such as in 2017, 2014, and 2016 where annual returns amounted to 2.95%, 3.56%, and 4.6% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHP | $10,000 | $14,418 | 3.92% |
| ACWI | $10,000 | $24,255 | 10.21% |
A $10,000 investment in SCHP would have resulted in a final balance of $14,418. This is a profit of $4,418 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.92%.
With a $10,000 investment in ACWI, the end total would have been $24,255. This equates to a $14,255 profit over 10 years and a compound annual growth rate (CAGR) of 10.21%.
SCHP’s CAGR is 6.30 percentage points lower than that of ACWI and as a result, would have yielded $9,837 less on a $10,000 investment. Thus, SCHP performed worse than ACWI by 6.30% annually.
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