The Schwab U.S. Large-Cap ETF (SCHX) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between SCHX and EMB? And which fund is better?
The expense ratio of SCHX is 0.36 percentage points lower than EMB’s (0.03% vs. 0.39%). SCHX also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, SCHX has provided higher returns than EMB over the past ten years.
In this article, we’ll compare SCHX vs. EMB. We’ll look at industry exposure and risk metrics, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss SCHX’s and EMB’s fund composition, holdings, and performance and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap ETF||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Large Blend||Emerging Markets Bond|
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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
SCHX’s dividend yield is 2.44% lower than that of EMB (1.41% vs. 3.85%). Also, SCHX yielded on average 8.17% more per year over the past decade (14.60% vs. 6.43%). The expense ratio of SCHX is 0.36 percentage points lower than EMB’s (0.03% vs. 0.39%).
|Facebook Inc A||2.08%|
|Alphabet Inc A||1.84%|
|Alphabet Inc Class C||1.78%|
|Berkshire Hathaway Inc Class B||1.32%|
|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%.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
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 Alpha is -0.14 while SCHX’s Standard Deviation is 13.8. Furthermore, the fund has a Beta of 1.02 and a R-squared of 99.83.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Standard Deviation of 8.44 with a Alpha of 0.89 and a Sharpe Ratio of 0.55. Its Beta is 1.36 while EMB’s Mean Return is 0.44. Furthermore, the fund has a Treynor Ratio of 3.24 and a R-squared of 23.34.
SCHX’s Mean Return is 0.80 points higher than that of EMB and its R-squared is 76.49 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than EMB. The Alpha and Beta of SCHX are 1.03 points lower and 0.34 points lower than EMB’s Alpha and Beta.
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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SCHX would have resulted in a final balance of $36,987. This is a profit of $26,987 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.60%.
With a $10,000 investment in EMB, the end total would have been $17,309. This equates to a $7,309 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.
SCHX’s CAGR is 8.17 percentage points higher than that of EMB and as a result, would have yielded $19,678 more on a $10,000 investment. Thus, SCHX outperformed EMB by 8.17% annually.
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