SCHX vs. IWN: What’s The Difference?

The Schwab U.S. Large-Cap ETF (SCHX) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between SCHX and IWN? And which fund is better?

The expense ratio of SCHX is 0.21 percentage points lower than IWN’s (0.03% vs. 0.24%). SCHX also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHX has provided higher returns than IWN over the past ten years.

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

Summary

SCHX IWN
Name Schwab U.S. Large-Cap ETF iShares Russell 2000 Value ETF
Category Large Blend Small Value
Issuer Schwab ETFs iShares
AUM 30.89B 15.48B
Avg. Return 14.60% 10.96%
Div. Yield 1.41% 1.26%
Expense Ratio 0.03% 0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

SCHX’s dividend yield is 0.15% higher than that of IWN (1.41% vs. 1.26%). Also, SCHX yielded on average 3.64% more per year over the past decade (14.60% vs. 10.96%). The expense ratio of SCHX is 0.21 percentage points lower than IWN’s (0.03% vs. 0.24%).

Fund Composition

Industry Exposure

SCHX vs. IWN - Industry Exposure

SCHX IWN
Technology 25.13% 6.02%
Industrials 8.65% 14.58%
Energy 2.72% 5.84%
Communication Services 11.26% 4.17%
Utilities 2.37% 4.69%
Healthcare 13.04% 10.94%
Consumer Defensive 5.97% 3.77%
Real Estate 3.13% 14.36%
Financial Services 13.82% 22.97%
Consumer Cyclical 11.63% 8.39%
Basic Materials 2.28% 4.29%

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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

SCHX is 19.11% more exposed to the Technology sector than IWN (25.13% vs 6.02%). SCHX’s exposure to Financial Services and Healthcare stocks is 9.15% lower and 2.10% higher respectively (13.82% vs. 22.97% and 13.04% vs. 10.94%). In total, Utilities, Energy, and Real Estate also make up 16.67% less of the fund’s holdings compared to IWN (8.22% vs. 24.89%).

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%.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

Risk Analysis

SCHX IWN
Mean Return 1.24 1.01
R-squared 99.83 72.64
Std. Deviation 13.8 19.28
Alpha -0.14 -6.32
Beta 1.02 1.21
Sharpe Ratio 1.03 0.59
Treynor Ratio 14.06 8.3

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

The iShares Russell 2000 Value ETF (IWN) has a R-squared of 72.64 with a Standard Deviation of 19.28 and a Sharpe Ratio of 0.59. Its Beta is 1.21 while IWN’s Alpha is -6.32. Furthermore, the fund has a Treynor Ratio of 8.3 and a Mean Return of 1.01.

SCHX’s Mean Return is 0.23 points higher than that of IWN and its R-squared is 27.19 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than IWN. The Alpha and Beta of SCHX are 6.18 points higher and 0.19 points lower than IWN’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. IWN - Annual Returns

Year SCHX IWN
2020 20.9% 4.5%
2019 31.4% 22.17%
2018 -4.52% -12.94%
2017 21.91% 7.73%
2016 11.78% 31.64%
2015 1.02% -7.53%
2014 13.33% 4.13%
2013 32.54% 34.3%
2012 16.06% 17.92%
2011 1.61% -5.64%
2010 15.88% 24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

SCHX vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
IWN $10,000 $22,680 10.96%

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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.

SCHX’s CAGR is 3.64 percentage points higher than that of IWN and as a result, would have yielded $14,307 more on a $10,000 investment. Thus, SCHX outperformed IWN by 3.64% annually.


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