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SCHP vs. IWN: What’s The Difference?

The Schwab U.S. TIPS ETF (SCHP) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and IWN is a iShares Small Value fund. So, what’s the difference between SCHP and IWN? And which fund is better?

The expense ratio of SCHP is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%). SCHP is mostly comprised of AAA bonds while IWN has a high exposure to the financial services sector. Overall, SCHP has provided lower returns than IWN over the past 10 years.

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

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Summary

SCHPIWN
NameSchwab U.S. TIPS ETFiShares Russell 2000 Value ETF
CategoryInflation-Protected BondSmall Value
IssuerSchwab ETFsiShares
AUM18.41B15.48B
Avg. Return3.92%10.96%
Div. Yield1.97%1.26%
Expense Ratio0.05%0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

SCHP’s dividend yield is 0.71% higher than that of IWN (1.97% vs. 1.26%). Also, SCHP yielded on average 7.05% less per year over the past decade (3.92% vs. 10.96%). The expense ratio of SCHP is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%).

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Fund Composition

Holdings

SCHP - Holdings

SCHP Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

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.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

SCHPIWN
Mean Return0.281.01
R-squared66.1672.64
Std. Deviation4.3219.28
Alpha-0.5-6.32
Beta1.171.21
Sharpe Ratio0.640.59
Treynor Ratio2.318.3

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

The iShares Russell 2000 Value ETF (IWN) has a Sharpe Ratio of 0.59 with a Standard Deviation of 19.28 and a R-squared of 72.64. Its Alpha is -6.32 while IWN’s Treynor Ratio is 8.3. Furthermore, the fund has a Beta of 1.21 and a Mean Return of 1.01.

SCHP’s Mean Return is 0.73 points lower than that of IWN and its R-squared is 6.48 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than IWN. The Alpha and Beta of SCHP are 5.82 points higher and 0.04 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

SCHP vs. IWN - Annual Returns

YearSCHPIWN
202010.94%4.5%
20198.36%22.17%
2018-1.31%-12.94%
20172.95%7.73%
20164.6%31.64%
2015-1.5%-7.53%
20143.56%4.13%
2013-8.66%34.3%
20126.83%17.92%
201113.38%-5.64%
20100.0%24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

SCHP vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHP$10,000$14,4183.92%
IWN$10,000$22,68010.96%

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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.

SCHP’s CAGR is 7.05 percentage points lower than that of IWN and as a result, would have yielded $8,262 less on a $10,000 investment. Thus, SCHP performed worse than IWN by 7.05% annually.


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