SCHX vs. DGRO: What’s The Difference?

The Schwab U.S. Large-Cap ETF (SCHX) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and DGRO is a iShares Large Value fund. So, what’s the difference between SCHX and DGRO? And which fund is better?

The expense ratio of SCHX is 0.05 percentage points lower than DGRO’s (0.03% vs. 0.08%). SCHX also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHX has provided higher returns than DGRO over the past ten years.

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

Summary

SCHX DGRO
Name Schwab U.S. Large-Cap ETF iShares Core Dividend Growth ETF
Category Large Blend Large Value
Issuer Schwab ETFs iShares
AUM 30.89B 20B
Avg. Return 14.60% 12.46%
Div. Yield 1.41% 2.04%
Expense Ratio 0.03% 0.08%

The Schwab U.S. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

SCHX’s dividend yield is 0.63% lower than that of DGRO (1.41% vs. 2.04%). Also, SCHX yielded on average 2.15% more per year over the past decade (14.60% vs. 12.46%). The expense ratio of SCHX is 0.05 percentage points lower than DGRO’s (0.03% vs. 0.08%).

Fund Composition

Industry Exposure

SCHX vs. DGRO - Industry Exposure

SCHX DGRO
Technology 25.13% 18.98%
Industrials 8.65% 12.52%
Energy 2.72% 0.11%
Communication Services 11.26% 4.53%
Utilities 2.37% 7.34%
Healthcare 13.04% 17.55%
Consumer Defensive 5.97% 10.24%
Real Estate 3.13% 0.0%
Financial Services 13.82% 18.47%
Consumer Cyclical 11.63% 7.42%
Basic Materials 2.28% 2.83%

The Schwab U.S. Large-Cap ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.

SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

SCHX is 6.15% more exposed to the Technology sector than DGRO (25.13% vs 18.98%). SCHX’s exposure to Financial Services and Healthcare stocks is 4.65% lower and 4.51% lower respectively (13.82% vs. 18.47% and 13.04% vs. 17.55%). In total, Utilities, Energy, and Real Estate also make up 0.77% more of the fund’s holdings compared to DGRO (8.22% vs. 7.45%).

Holdings

SCHX - Holdings

SCHX Holdings Weight
Apple Inc 5.37%
Microsoft Corp 5.1%
Amazon.com Inc 3.69%
Facebook Inc A 2.08%
Alphabet Inc A 1.84%
Alphabet Inc Class C 1.78%
Berkshire Hathaway Inc Class B 1.32%
Tesla Inc 1.31%
NVIDIA Corp 1.25%
JPMorgan Chase & Co 1.18%

SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.

Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

SCHX DGRO
Mean Return 1.24 0
R-squared 99.83 0
Std. Deviation 13.8 0
Alpha -0.14 0
Beta 1.02 0
Sharpe Ratio 1.03 0
Treynor Ratio 14.06 0

The Schwab U.S. Large-Cap ETF (SCHX) has a Mean Return of 1.24 with a Treynor Ratio of 14.06 and a Sharpe Ratio of 1.03. Its R-squared is 99.83 while SCHX’s Alpha is -0.14. Furthermore, the fund has a Standard Deviation of 13.8 and a Beta of 1.02.

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

SCHX’s Mean Return is 1.24 points higher than that of DGRO and its R-squared is 99.83 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than DGRO. The Alpha and Beta of SCHX are 0.14 points lower and 1.02 points higher than DGRO’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. DGRO - Annual Returns

Year SCHX DGRO
2020 20.9% 9.47%
2019 31.4% 30.02%
2018 -4.52% -2.24%
2017 21.91% 22.84%
2016 11.78% 15.27%
2015 1.02% -0.62%
2014 13.33% 0.0%
2013 32.54% 0.0%
2012 16.06% 0.0%
2011 1.61% 0.0%
2010 15.88% 0.0%

SCHX had its best year in 2013 with an annual return of 32.54%. SCHX’s worst year over the past decade yielded -4.52% and occurred in 2018. In most years the Schwab U.S. Large-Cap ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.33%, 15.88%, and 16.06% respectively.

The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

SCHX vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $20,880 14.60%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in SCHX would have resulted in a final balance of $20,880. This is a profit of $10,880 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.60%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

SCHX’s CAGR is 2.15 percentage points higher than that of DGRO and as a result, would have yielded $1,300 more on a $10,000 investment. Thus, SCHX outperformed DGRO by 2.15% annually.


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