The Schwab U.S. Large-Cap ETF (SCHX) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between SCHX and IWR? And which fund is better?
The expense ratio of SCHX is 0.16 percentage points lower than IWR’s (0.03% vs. 0.19%). SCHX also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHX has provided higher returns than IWR over the past ten years.
In this article, we’ll compare SCHX vs. IWR. We’ll look at performance and holdings, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss SCHX’s and IWR’s annual returns, portfolio growth, and risk metrics and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap ETF||iShares Russell Mid-Cap ETF|
|Category||Large Blend||Mid-Cap Blend|
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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
SCHX’s dividend yield is 0.42% higher than that of IWR (1.41% vs. 0.99%). Also, SCHX yielded on average 0.45% more per year over the past decade (14.60% vs. 14.15%). The expense ratio of SCHX is 0.16 percentage points lower than IWR’s (0.03% vs. 0.19%).
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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
SCHX is 5.46% more exposed to the Technology sector than IWR (25.13% vs 19.67%). SCHX’s exposure to Financial Services and Healthcare stocks is 2.18% higher and 1.28% higher respectively (13.82% vs. 11.64% and 13.04% vs. 11.76%). In total, Utilities, Energy, and Real Estate also make up 8.03% less of the fund’s holdings compared to IWR (8.22% vs. 16.25%).
|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%.
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||0.43%|
|Carrier Global Corp Ordinary Shares||0.43%|
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
The Schwab U.S. Large-Cap ETF (SCHX) has a Mean Return of 1.24 with a R-squared of 99.83 and a Treynor Ratio of 14.06. Its Beta is 1.02 while SCHX’s Sharpe Ratio is 1.03. Furthermore, the fund has a Standard Deviation of 13.8 and a Alpha of -0.14.
The iShares Russell Mid-Cap ETF (IWR) has a R-squared of 91.52 with a Alpha of -2.8 and a Beta of 1.11. Its Sharpe Ratio is 0.86 while IWR’s Mean Return is 1.17. Furthermore, the fund has a Standard Deviation of 15.66 and a Treynor Ratio of 11.72.
SCHX’s Mean Return is 0.07 points higher than that of IWR and its R-squared is 8.31 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than IWR. The Alpha and Beta of SCHX are 2.66 points higher and 0.09 points lower than IWR’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 2013 was the strongest year for IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% 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 IWR, the end total would have been $31,737. This equates to a $21,737 profit over 10 years and a compound annual growth rate (CAGR) of 14.15%.
SCHX’s CAGR is 0.45 percentage points higher than that of IWR and as a result, would have yielded $5,250 more on a $10,000 investment. Thus, SCHX outperformed IWR by 0.45% annually.
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