SCHX vs. MTUM: What’s The Difference?

The Schwab U.S. Large-Cap ETF (SCHX) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between SCHX and MTUM? And which fund is better?

The expense ratio of SCHX is 0.12 percentage points lower than MTUM’s (0.03% vs. 0.15%). SCHX also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHX has provided lower returns than MTUM over the past ten years.

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

Summary

SCHX MTUM
Name Schwab U.S. Large-Cap ETF iShares MSCI USA Momentum Factor ETF
Category Large Blend Large Growth
Issuer Schwab ETFs iShares
AUM 30.89B 14.53B
Avg. Return 14.60% 17.37%
Div. Yield 1.41% 0.44%
Expense Ratio 0.03% 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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

SCHX’s dividend yield is 0.97% higher than that of MTUM (1.41% vs. 0.44%). Also, SCHX yielded on average 2.77% less per year over the past decade (14.60% vs. 17.37%). The expense ratio of SCHX is 0.12 percentage points lower than MTUM’s (0.03% vs. 0.15%).

Fund Composition

Industry Exposure

SCHX vs. MTUM - Industry Exposure

SCHX MTUM
Technology 25.13% 15.24%
Industrials 8.65% 12.47%
Energy 2.72% 1.77%
Communication Services 11.26% 13.18%
Utilities 2.37% 0.19%
Healthcare 13.04% 6.41%
Consumer Defensive 5.97% 2.88%
Real Estate 3.13% 0.43%
Financial Services 13.82% 34.32%
Consumer Cyclical 11.63% 9.96%
Basic Materials 2.28% 3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

SCHX is 9.89% more exposed to the Technology sector than MTUM (25.13% vs 15.24%). SCHX’s exposure to Financial Services and Healthcare stocks is 20.50% lower and 6.63% higher respectively (13.82% vs. 34.32% and 13.04% vs. 6.41%). In total, Utilities, Energy, and Real Estate also make up 5.83% more of the fund’s holdings compared to MTUM (8.22% vs. 2.39%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

Risk Analysis

SCHX MTUM
Mean Return 1.24 0
R-squared 99.83 0
Std. Deviation 13.8 0
Alpha -0.14 0
Beta 1.02 0
Sharpe Ratio 1.03 0
Treynor Ratio 14.06 0

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Standard Deviation of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its Treynor Ratio is 0 while MTUM’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Alpha of 0.

SCHX’s Mean Return is 1.24 points higher than that of MTUM and its R-squared is 99.83 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than MTUM. The Alpha and Beta of SCHX are 0.14 points lower and 1.02 points higher than MTUM’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. MTUM - Annual Returns

Year SCHX MTUM
2020 20.9% 29.69%
2019 31.4% 27.57%
2018 -4.52% -1.77%
2017 21.91% 37.6%
2016 11.78% 4.89%
2015 1.02% 9.12%
2014 13.33% 14.48%
2013 32.54% 0.0%
2012 16.06% 0.0%
2011 1.61% 0.0%
2010 15.88% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

SCHX vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $23,664 14.60%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in SCHX would have resulted in a final balance of $23,664. This is a profit of $13,664 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.60%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

SCHX’s CAGR is 2.77 percentage points lower than that of MTUM and as a result, would have yielded $5,637 less on a $10,000 investment. Thus, SCHX performed worse than MTUM by 2.77% annually.


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