The Schwab U.S. TIPS ETF (SCHP) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between SCHP and IWS? And which fund is better?
The expense ratio of SCHP is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%). SCHP is mostly comprised of AAA bonds while IWS has a high exposure to the financial services sector. Overall, SCHP has provided lower returns than IWS over the past 10 years.
In this article, we’ll compare SCHP vs. IWS. We’ll look at risk metrics and annual returns, as well as at their performance and fund composition. Moreover, I’ll also discuss SCHP’s and IWS’s industry exposure, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| SCHP | IWS | |
| Name | Schwab U.S. TIPS ETF | iShares Russell Mid-Cap Value ETF |
| Category | Inflation-Protected Bond | Mid-Cap Value |
| Issuer | Schwab ETFs | iShares |
| AUM | 18.41B | 14.24B |
| Avg. Return | 3.92% | 12.35% |
| Div. Yield | 1.97% | 1.34% |
| Expense Ratio | 0.05% | 0.23% |
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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
SCHP’s dividend yield is 0.63% higher than that of IWS (1.97% vs. 1.34%). Also, SCHP yielded on average 8.43% less per year over the past decade (3.92% vs. 12.35%). The expense ratio of SCHP is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%).
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.
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
Risk Analysis
| SCHP | IWS | |
| Mean Return | 0.28 | 1.06 |
| R-squared | 66.16 | 87.04 |
| Std. Deviation | 4.32 | 16.03 |
| Alpha | -0.5 | -4.11 |
| Beta | 1.17 | 1.1 |
| Sharpe Ratio | 0.64 | 0.75 |
| Treynor Ratio | 2.31 | 10.3 |
The Schwab U.S. TIPS ETF (SCHP) has a Treynor Ratio of 2.31 with a Standard Deviation of 4.32 and a Mean Return of 0.28. Its Sharpe Ratio is 0.64 while SCHP’s Beta is 1.17. Furthermore, the fund has a R-squared of 66.16 and a Alpha of -0.5.
The iShares Russell Mid-Cap Value ETF (IWS) has a R-squared of 87.04 with a Alpha of -4.11 and a Standard Deviation of 16.03. Its Beta is 1.1 while IWS’s Treynor Ratio is 10.3. Furthermore, the fund has a Mean Return of 1.06 and a Sharpe Ratio of 0.75.
SCHP’s Mean Return is 0.78 points lower than that of IWS and its R-squared is 20.88 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than IWS. The Alpha and Beta of SCHP are 3.61 points higher and 0.07 points higher than IWS’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHP | IWS |
| 2020 | 10.94% | 4.76% |
| 2019 | 8.36% | 26.78% |
| 2018 | -1.31% | -12.36% |
| 2017 | 2.95% | 13.1% |
| 2016 | 4.6% | 19.69% |
| 2015 | -1.5% | -4.93% |
| 2014 | 3.56% | 14.49% |
| 2013 | -8.66% | 33.11% |
| 2012 | 6.83% | 18.27% |
| 2011 | 13.38% | -1.55% |
| 2010 | 0.0% | 24.46% |
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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHP | $10,000 | $14,418 | 3.92% |
| IWS | $10,000 | $26,581 | 12.35% |
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 IWS, the end total would have been $26,581. This equates to a $16,581 profit over 10 years and a compound annual growth rate (CAGR) of 12.35%.
SCHP’s CAGR is 8.43 percentage points lower than that of IWS and as a result, would have yielded $12,163 less on a $10,000 investment. Thus, SCHP performed worse than IWS by 8.43% annually.
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