The Schwab U.S. Large-Cap ETF (SCHX) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between SCHX and SCHP? And which fund is better?
The expense ratio of SCHX is 0.02 percentage points lower than SCHP’s (0.03% vs. 0.05%). SCHX also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, SCHX has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare SCHX vs. SCHP. We’ll look at fund composition and performance, as well as at their holdings and industry exposure. Moreover, I’ll also discuss SCHX’s and SCHP’s portfolio growth, risk metrics, and annual returns and examine how these affect their overall returns.
Summary
| SCHX | SCHP | |
| Name | Schwab U.S. Large-Cap ETF | Schwab U.S. TIPS ETF |
| Category | Large Blend | Inflation-Protected Bond |
| Issuer | Schwab ETFs | Schwab ETFs |
| AUM | 30.89B | 18.41B |
| Avg. Return | 14.60% | 3.92% |
| Div. Yield | 1.41% | 1.97% |
| Expense Ratio | 0.03% | 0.05% |
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 Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
SCHX’s dividend yield is 0.56% lower than that of SCHP (1.41% vs. 1.97%). Also, SCHX yielded on average 10.69% more per year over the past decade (14.60% vs. 3.92%). The expense ratio of SCHX is 0.02 percentage points lower than SCHP’s (0.03% vs. 0.05%).
Fund Composition
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%.
| SCHP Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| SCHX | SCHP | |
| Mean Return | 1.24 | 0.28 |
| R-squared | 99.83 | 66.16 |
| Std. Deviation | 13.8 | 4.32 |
| Alpha | -0.14 | -0.5 |
| Beta | 1.02 | 1.17 |
| Sharpe Ratio | 1.03 | 0.64 |
| Treynor Ratio | 14.06 | 2.31 |
The Schwab U.S. Large-Cap ETF (SCHX) has a R-squared of 99.83 with a Mean Return of 1.24 and a Treynor Ratio of 14.06. Its Sharpe Ratio is 1.03 while SCHX’s Beta is 1.02. Furthermore, the fund has a Standard Deviation of 13.8 and a Alpha of -0.14.
The Schwab U.S. TIPS ETF (SCHP) has a Mean Return of 0.28 with a Treynor Ratio of 2.31 and a Standard Deviation of 4.32. Its R-squared is 66.16 while SCHP’s Beta is 1.17. Furthermore, the fund has a Sharpe Ratio of 0.64 and a Alpha of -0.5.
SCHX’s Mean Return is 0.96 points higher than that of SCHP and its R-squared is 33.67 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than SCHP. The Alpha and Beta of SCHX are 0.36 points higher and 0.15 points lower than SCHP’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHX | SCHP |
| 2020 | 20.9% | 10.94% |
| 2019 | 31.4% | 8.36% |
| 2018 | -4.52% | -1.31% |
| 2017 | 21.91% | 2.95% |
| 2016 | 11.78% | 4.6% |
| 2015 | 1.02% | -1.5% |
| 2014 | 13.33% | 3.56% |
| 2013 | 32.54% | -8.66% |
| 2012 | 16.06% | 6.83% |
| 2011 | 1.61% | 13.38% |
| 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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHX | $10,000 | $36,987 | 14.60% |
| SCHP | $10,000 | $14,418 | 3.92% |
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 SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
SCHX’s CAGR is 10.69 percentage points higher than that of SCHP and as a result, would have yielded $22,569 more on a $10,000 investment. Thus, SCHX outperformed SCHP by 10.69% annually.
