The Schwab U.S. Large-Cap ETF (SCHX) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between SCHX and IUSB? And which fund is better?
The expense ratio of SCHX is 0.03 percentage points lower than IUSB’s (0.03% vs. 0.06%). SCHX also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, SCHX has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare SCHX vs. IUSB. We’ll look at annual returns and fund composition, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss SCHX’s and IUSB’s holdings, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap ETF||iShares Core Total USD Bond Market ETF|
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 Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
SCHX’s dividend yield is 0.69% lower than that of IUSB (1.41% vs. 2.1%). Also, SCHX yielded on average 10.47% more per year over the past decade (14.60% vs. 4.13%). The expense ratio of SCHX is 0.03 percentage points lower than IUSB’s (0.03% vs. 0.06%).
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|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%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
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The Schwab U.S. Large-Cap ETF (SCHX) has a Beta of 1.02 with a R-squared of 99.83 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 Mean Return of 1.24 and a Treynor Ratio of 14.06.
The iShares Core Total USD Bond Market ETF (IUSB) has a Beta of 0 with a Treynor Ratio of 0 and a R-squared of 0. Its Alpha is 0 while IUSB’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.
SCHX’s Mean Return is 1.24 points higher than that of IUSB and its R-squared is 99.83 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than IUSB. The Alpha and Beta of SCHX are 0.14 points lower and 1.02 points higher than IUSB’s Alpha and Beta.
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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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
SCHX’s CAGR is 10.47 percentage points higher than that of IUSB and as a result, would have yielded $8,176 more on a $10,000 investment. Thus, SCHX outperformed IUSB by 10.47% annually.
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