The Schwab U.S. Large-Cap ETF (SCHX) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between SCHX and GOVT? And which fund is better?
The expense ratio of SCHX is 0.02 percentage points lower than GOVT’s (0.03% vs. 0.05%). SCHX also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, SCHX has provided higher returns than GOVT over the past ten years.
In this article, we’ll compare SCHX vs. GOVT. We’ll look at risk metrics and fund composition, as well as at their annual returns and holdings. Moreover, I’ll also discuss SCHX’s and GOVT’s industry exposure, performance, and portfolio growth and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap ETF||iShares U.S. Treasury Bond ETF|
|Category||Large Blend||Intermediate Government|
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 U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
SCHX’s dividend yield is 0.41% higher than that of GOVT (1.41% vs. 1.0%). Also, SCHX yielded on average 11.93% more per year over the past decade (14.60% vs. 2.67%). The expense ratio of SCHX is 0.02 percentage points lower than GOVT’s (0.03% vs. 0.05%).
|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%.
|GOVT Bond Sectors||Weight|
GOVT’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.
The Schwab U.S. Large-Cap ETF (SCHX) has a Alpha of -0.14 with a Sharpe Ratio of 1.03 and a Treynor Ratio of 14.06. Its R-squared is 99.83 while SCHX’s Standard Deviation is 13.8. Furthermore, the fund has a Mean Return of 1.24 and a Beta of 1.02.
The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its Beta is 0 while GOVT’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.
SCHX’s Mean Return is 1.24 points higher than that of GOVT and its R-squared is 99.83 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than GOVT. The Alpha and Beta of SCHX are 0.14 points lower and 1.02 points higher than GOVT’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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SCHX would have resulted in a final balance of $31,364. This is a profit of $21,364 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.60%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
SCHX’s CAGR is 11.93 percentage points higher than that of GOVT and as a result, would have yielded $19,067 more on a $10,000 investment. Thus, SCHX outperformed GOVT by 11.93% annually.
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