The Schwab U.S. TIPS ETF (SCHP) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between SCHP and SCHG? And which fund is better?
The expense ratio of SCHP is 0.01 percentage points higher than SCHG’s (0.05% vs. 0.04%). SCHP is mostly comprised of AAA bonds while SCHG has a high exposure to the technology sector. Overall, SCHP has provided lower returns than SCHG over the past 10 years.
In this article, we’ll compare SCHP vs. SCHG. We’ll look at performance and annual returns, as well as at their holdings and fund composition. Moreover, I’ll also discuss SCHP’s and SCHG’s risk metrics, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| SCHP | SCHG | |
| Name | Schwab U.S. TIPS ETF | Schwab U.S. Large-Cap Growth ETF |
| Category | Inflation-Protected Bond | Large Growth |
| Issuer | Schwab ETFs | Schwab ETFs |
| AUM | 18.41B | 15.16B |
| Avg. Return | 3.92% | 17.81% |
| Div. Yield | 1.97% | 0.43% |
| Expense Ratio | 0.05% | 0.04% |
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 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%.
SCHP’s dividend yield is 1.54% higher than that of SCHG (1.97% vs. 0.43%). Also, SCHP yielded on average 13.90% less per year over the past decade (3.92% vs. 17.81%). The expense ratio of SCHP is 0.01 percentage points higher than SCHG’s (0.05% vs. 0.04%).
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.
| 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%.
Risk Analysis
| SCHP | SCHG | |
| Mean Return | 0.28 | 1.46 |
| R-squared | 66.16 | 92.92 |
| Std. Deviation | 4.32 | 14.78 |
| Alpha | -0.5 | 1.97 |
| Beta | 1.17 | 1.05 |
| Sharpe Ratio | 0.64 | 1.14 |
| Treynor Ratio | 2.31 | 16.3 |
The Schwab U.S. TIPS ETF (SCHP) has a R-squared of 66.16 with a Beta of 1.17 and a Alpha of -0.5. Its Sharpe Ratio is 0.64 while SCHP’s Standard Deviation is 4.32. Furthermore, the fund has a Treynor Ratio of 2.31 and a Mean Return of 0.28.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Standard Deviation of 14.78 with a Sharpe Ratio of 1.14 and a R-squared of 92.92. Its Treynor Ratio is 16.3 while SCHG’s Beta is 1.05. Furthermore, the fund has a Mean Return of 1.46 and a Alpha of 1.97.
SCHP’s Mean Return is 1.18 points lower than that of SCHG and its R-squared is 26.76 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than SCHG. The Alpha and Beta of SCHP are 2.47 points lower and 0.12 points higher than SCHG’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHP | SCHG |
| 2020 | 10.94% | 39.13% |
| 2019 | 8.36% | 36.21% |
| 2018 | -1.31% | -1.35% |
| 2017 | 2.95% | 28.04% |
| 2016 | 4.6% | 6.76% |
| 2015 | -1.5% | 3.26% |
| 2014 | 3.56% | 15.74% |
| 2013 | -8.66% | 33.96% |
| 2012 | 6.83% | 17.02% |
| 2011 | 13.38% | -0.67% |
| 2010 | 0.0% | 16.83% |
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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHP | $10,000 | $14,418 | 3.92% |
| SCHG | $10,000 | $47,556 | 17.81% |
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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
SCHP’s CAGR is 13.90 percentage points lower than that of SCHG and as a result, would have yielded $33,138 less on a $10,000 investment. Thus, SCHP performed worse than SCHG by 13.90% annually.
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