The Schwab U.S. Large-Cap ETF (SCHX) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between SCHX and TLT? And which fund is better?
The expense ratio of SCHX is 0.12 percentage points lower than TLT’s (0.03% vs. 0.15%). SCHX also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, SCHX has provided higher returns than TLT over the past ten years.
In this article, we’ll compare SCHX vs. TLT. We’ll look at annual returns and fund composition, as well as at their industry exposure and holdings. Moreover, I’ll also discuss SCHX’s and TLT’s risk metrics, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap ETF||iShares 20+ Year Treasury Bond ETF|
|Category||Large Blend||Long Government|
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
SCHX’s dividend yield is 0.09% lower than that of TLT (1.41% vs. 1.5%). Also, SCHX yielded on average 5.61% more per year over the past decade (14.60% vs. 9.00%). The expense ratio of SCHX is 0.12 percentage points lower than TLT’s (0.03% vs. 0.15%).
|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%.
|TLT Bond Sectors||Weight|
TLT’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.
The Schwab U.S. Large-Cap ETF (SCHX) has a Treynor Ratio of 14.06 with a Standard Deviation of 13.8 and a Alpha of -0.14. Its Sharpe Ratio is 1.03 while SCHX’s Mean Return is 1.24. Furthermore, the fund has a Beta of 1.02 and a R-squared of 99.83.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Alpha of -2.83 with a Sharpe Ratio of 0.55 and a Beta of 3.54. Its Treynor Ratio is 1.82 while TLT’s Standard Deviation is 12.76. Furthermore, the fund has a Mean Return of 0.63 and a R-squared of 68.76.
SCHX’s Mean Return is 0.61 points higher than that of TLT and its R-squared is 31.07 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than TLT. The Alpha and Beta of SCHX are 2.69 points higher and 2.52 points lower than TLT’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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% 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 TLT, the end total would have been $21,793. This equates to a $11,793 profit over 10 years and a compound annual growth rate (CAGR) of 9.00%.
SCHX’s CAGR is 5.61 percentage points higher than that of TLT and as a result, would have yielded $15,194 more on a $10,000 investment. Thus, SCHX outperformed TLT by 5.61% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.