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SCHX vs. IEF: What’s The Difference?

The Schwab U.S. Large-Cap ETF (SCHX) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between SCHX and IEF? And which fund is better?

The expense ratio of SCHX is 0.12 percentage points lower than IEF’s (0.03% vs. 0.15%). SCHX also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, SCHX has provided higher returns than IEF over the past ten years.

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

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Summary

SCHXIEF
NameSchwab U.S. Large-Cap ETFiShares 7-10 Year Treasury Bond ETF
CategoryLarge BlendLong Government
IssuerSchwab ETFsiShares
AUM30.89B13.44B
Avg. Return14.60%5.06%
Div. Yield1.41%0.84%
Expense Ratio0.03%0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

SCHX’s dividend yield is 0.57% higher than that of IEF (1.41% vs. 0.84%). Also, SCHX yielded on average 9.54% more per year over the past decade (14.60% vs. 5.06%). The expense ratio of SCHX is 0.12 percentage points lower than IEF’s (0.03% vs. 0.15%).

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Fund Composition

Holdings

SCHX - Holdings

SCHX HoldingsWeight
Apple Inc5.37%
Microsoft Corp5.1%
Amazon.com Inc3.69%
Facebook Inc A2.08%
Alphabet Inc A1.84%
Alphabet Inc Class C1.78%
Berkshire Hathaway Inc Class B1.32%
Tesla Inc1.31%
NVIDIA Corp1.25%
JPMorgan Chase & Co1.18%

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%.

IEF - Holdings

IEF Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

IEF’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.

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Risk Analysis

SCHXIEF
Mean Return1.240.32
R-squared99.8377.56
Std. Deviation13.85.42
Alpha-0.14-1.2
Beta1.021.59
Sharpe Ratio1.030.6
Treynor Ratio14.061.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Treynor Ratio of 1.97 with a Alpha of -1.2 and a Mean Return of 0.32. Its Standard Deviation is 5.42 while IEF’s Beta is 1.59. Furthermore, the fund has a Sharpe Ratio of 0.6 and a R-squared of 77.56.

SCHX’s Mean Return is 0.92 points higher than that of IEF and its R-squared is 22.27 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than IEF. The Alpha and Beta of SCHX are 1.06 points higher and 0.57 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

SCHX vs. IEF - Annual Returns

YearSCHXIEF
202020.9%9.84%
201931.4%8.38%
2018-4.52%0.82%
201721.91%2.47%
201611.78%1.0%
20151.02%1.55%
201413.33%8.92%
201332.54%-6.12%
201216.06%4.06%
20111.61%15.46%
201015.88%9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

SCHX vs. IEF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHX$10,000$36,98714.60%
IEF$10,000$15,4975.06%

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 IEF, the end total would have been $15,497. This equates to a $5,497 profit over 10 years and a compound annual growth rate (CAGR) of 5.06%.

SCHX’s CAGR is 9.54 percentage points higher than that of IEF and as a result, would have yielded $21,490 more on a $10,000 investment. Thus, SCHX outperformed IEF by 9.54% annually.


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