SCHX vs. IWS: What’s The Difference?

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

The expense ratio of SCHX is 0.20 percentage points lower than IWS’s (0.03% vs. 0.23%). SCHX also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHX has provided higher returns than IWS over the past ten years.

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

Summary

SCHX IWS
Name Schwab U.S. Large-Cap ETF iShares Russell Mid-Cap Value ETF
Category Large Blend Mid-Cap Value
Issuer Schwab ETFs iShares
AUM 30.89B 14.24B
Avg. Return 14.60% 12.35%
Div. Yield 1.41% 1.34%
Expense Ratio 0.03% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

SCHX’s dividend yield is 0.07% higher than that of IWS (1.41% vs. 1.34%). Also, SCHX yielded on average 2.26% more per year over the past decade (14.60% vs. 12.35%). The expense ratio of SCHX is 0.20 percentage points lower than IWS’s (0.03% vs. 0.23%).

Fund Composition

Industry Exposure

SCHX vs. IWS - Industry Exposure

SCHX IWS
Technology 25.13% 11.39%
Industrials 8.65% 14.6%
Energy 2.72% 4.71%
Communication Services 11.26% 4.08%
Utilities 2.37% 6.97%
Healthcare 13.04% 8.56%
Consumer Defensive 5.97% 4.76%
Real Estate 3.13% 11.71%
Financial Services 13.82% 15.75%
Consumer Cyclical 11.63% 12.07%
Basic Materials 2.28% 5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

SCHX is 13.74% more exposed to the Technology sector than IWS (25.13% vs 11.39%). SCHX’s exposure to Financial Services and Healthcare stocks is 1.93% lower and 4.48% higher respectively (13.82% vs. 15.75% and 13.04% vs. 8.56%). In total, Utilities, Energy, and Real Estate also make up 15.17% less of the fund’s holdings compared to IWS (8.22% vs. 23.39%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

SCHX IWS
Mean Return 1.24 1.06
R-squared 99.83 87.04
Std. Deviation 13.8 16.03
Alpha -0.14 -4.11
Beta 1.02 1.1
Sharpe Ratio 1.03 0.75
Treynor Ratio 14.06 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Beta of 1.1 and a Sharpe Ratio of 0.75. Its Mean Return is 1.06 while IWS’s Alpha is -4.11. Furthermore, the fund has a Treynor Ratio of 10.3 and a R-squared of 87.04.

SCHX’s Mean Return is 0.18 points higher than that of IWS and its R-squared is 12.79 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than IWS. The Alpha and Beta of SCHX are 3.97 points higher and 0.08 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. IWS - Annual Returns

Year SCHX IWS
2020 20.9% 4.76%
2019 31.4% 26.78%
2018 -4.52% -12.36%
2017 21.91% 13.1%
2016 11.78% 19.69%
2015 1.02% -4.93%
2014 13.33% 14.49%
2013 32.54% 33.11%
2012 16.06% 18.27%
2011 1.61% -1.55%
2010 15.88% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

SCHX vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
IWS $10,000 $26,581 12.35%

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 IWS, the end total would have been $26,581. This equates to a $16,581 profit over 10 years and a compound annual growth rate (CAGR) of 12.35%.

SCHX’s CAGR is 2.26 percentage points higher than that of IWS and as a result, would have yielded $10,406 more on a $10,000 investment. Thus, SCHX outperformed IWS by 2.26% annually.


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