SCHP vs. IUSB: What’s The Difference?

The Schwab U.S. TIPS ETF (SCHP) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and IUSB is a iShares N/A fund. So, what’s the difference between SCHP and IUSB? And which fund is better?

The expense ratio of SCHP is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%). SCHP is mostly comprised of AAA bonds and IUSB has a high exposure to AAA bond. Overall, SCHP has provided lower returns than IUSB over the past 6 years.

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

Summary

SCHP IUSB
Name Schwab U.S. TIPS ETF iShares Core Total USD Bond Market ETF
Category Inflation-Protected Bond N/A
Issuer Schwab ETFs iShares
AUM 18.41B 14.49B
Avg. Return 3.92% 4.13%
Div. Yield 1.97% 2.1%
Expense Ratio 0.05% 0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

SCHP’s dividend yield is 0.13% lower than that of IUSB (1.97% vs. 2.1%). Also, SCHP yielded on average 0.21% less per year over the past decade (3.92% vs. 4.13%). The expense ratio of SCHP is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%).

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Fund Composition

Holdings

SCHP - 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.

IUSB - Holdings

IUSB Bond Sectors Weight
AAA 58.32%
BBB 16.98%
A 12.27%
BB 4.33%
AA 3.36%
B 2.8%
Others 1.01%
Below B 0.92%
US Government 0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

SCHP IUSB
Mean Return 0.28 0
R-squared 66.16 0
Std. Deviation 4.32 0
Alpha -0.5 0
Beta 1.17 0
Sharpe Ratio 0.64 0
Treynor Ratio 2.31 0

The Schwab U.S. TIPS ETF (SCHP) has a Treynor Ratio of 2.31 with a Mean Return of 0.28 and a Beta of 1.17. Its Standard Deviation is 4.32 while SCHP’s Sharpe Ratio is 0.64. Furthermore, the fund has a R-squared of 66.16 and a Alpha of -0.5.

The iShares Core Total USD Bond Market ETF (IUSB) has a Mean Return of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its Beta is 0 while IUSB’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.

SCHP’s Mean Return is 0.28 points higher than that of IUSB and its R-squared is 66.16 points higher. With a Standard Deviation of 4.32, SCHP is slightly more volatile than IUSB. The Alpha and Beta of SCHP are 0.50 points lower and 1.17 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

SCHP vs. IUSB - Annual Returns

Year SCHP IUSB
2020 10.94% 7.59%
2019 8.36% 9.26%
2018 -1.31% -0.38%
2017 2.95% 4.06%
2016 4.6% 3.78%
2015 -1.5% 0.46%
2014 3.56% 0.0%
2013 -8.66% 0.0%
2012 6.83% 0.0%
2011 13.38% 0.0%
2010 0.0% 0.0%

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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

SCHP vs. IUSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHP $10,000 $12,584 3.92%
IUSB $10,000 $12,704 4.13%

A $10,000 investment in SCHP would have resulted in a final balance of $12,584. This is a profit of $2,584 over 6 years and amounts to a compound annual growth rate (CAGR) of 3.92%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

SCHP’s CAGR is 0.21 percentage points lower than that of IUSB and as a result, would have yielded $120 less on a $10,000 investment. Thus, SCHP performed worse than IUSB by 0.21% annually.


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