SCHX vs. TLT: What’s The Difference?

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.

Summary

SCHX TLT
Name Schwab U.S. Large-Cap ETF iShares 20+ Year Treasury Bond ETF
Category Large Blend Long Government
Issuer Schwab ETFs iShares
AUM 30.89B 15.15B
Avg. Return 14.60% 9.00%
Div. Yield 1.41% 1.5%
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 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%).

Fund Composition

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%.

TLT - Holdings

TLT 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%

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.

Risk Analysis

SCHX TLT
Mean Return 1.24 0.63
R-squared 99.83 68.76
Std. Deviation 13.8 12.76
Alpha -0.14 -2.83
Beta 1.02 3.54
Sharpe Ratio 1.03 0.55
Treynor Ratio 14.06 1.82

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.

Performance

Annual Returns

SCHX vs. TLT - Annual Returns

Year SCHX TLT
2020 20.9% 17.92%
2019 31.4% 14.93%
2018 -4.52% -2.07%
2017 21.91% 8.92%
2016 11.78% 1.36%
2015 1.02% -1.65%
2014 13.33% 27.35%
2013 32.54% -13.91%
2012 16.06% 3.25%
2011 1.61% 33.6%
2010 15.88% 9.25%

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.

Portfolio Growth

SCHX vs. TLT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
TLT $10,000 $21,793 9.00%

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.


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