SCHX vs. USMV: What’s The Difference?

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

The expense ratio of SCHX is 0.12 percentage points lower than USMV’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 higher returns than USMV over the past ten years.

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

Summary

SCHX USMV
Name Schwab U.S. Large-Cap ETF iShares MSCI USA Min Vol Factor ETF
Category Large Blend Large Blend
Issuer Schwab ETFs iShares
AUM 30.89B 27.6B
Avg. Return 14.60% 13.89%
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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% 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 USMV (1.41% vs. 1.5%). Also, SCHX yielded on average 0.71% more per year over the past decade (14.60% vs. 13.89%). The expense ratio of SCHX is 0.12 percentage points lower than USMV’s (0.03% vs. 0.15%).

Fund Composition

Industry Exposure

SCHX vs. USMV - Industry Exposure

SCHX USMV
Technology 25.13% 20.53%
Industrials 8.65% 10.51%
Energy 2.72% 0.21%
Communication Services 11.26% 11.03%
Utilities 2.37% 6.93%
Healthcare 13.04% 18.42%
Consumer Defensive 5.97% 12.82%
Real Estate 3.13% 2.73%
Financial Services 13.82% 9.65%
Consumer Cyclical 11.63% 5.53%
Basic Materials 2.28% 1.65%

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 Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

SCHX is 4.60% more exposed to the Technology sector than USMV (25.13% vs 20.53%). SCHX’s exposure to Financial Services and Healthcare stocks is 4.17% higher and 5.38% lower respectively (13.82% vs. 9.65% and 13.04% vs. 18.42%). In total, Utilities, Energy, and Real Estate also make up 1.65% less of the fund’s holdings compared to USMV (8.22% vs. 9.87%).

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%.

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe Inc 1.45%
The Kroger Co 1.44%
Johnson & Johnson 1.42%
Gilead Sciences Inc 1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

Risk Analysis

SCHX USMV
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 Beta of 1.02 with a Mean Return of 1.24 and a Sharpe Ratio of 1.03. Its Standard Deviation is 13.8 while SCHX’s Treynor Ratio is 14.06. Furthermore, the fund has a R-squared of 99.83 and a Alpha of -0.14.

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

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

Performance

Annual Returns

SCHX vs. USMV - Annual Returns

Year SCHX USMV
2020 20.9% 5.6%
2019 31.4% 27.77%
2018 -4.52% 1.36%
2017 21.91% 18.97%
2016 11.78% 10.5%
2015 1.02% 5.5%
2014 13.33% 16.34%
2013 32.54% 25.11%
2012 16.06% 11.04%
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 2019 was the strongest year for USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.

Portfolio Growth

SCHX vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $31,364 14.60%
USMV $10,000 $27,607 13.89%

A $10,000 investment in SCHX would have resulted in a final balance of $31,364. This is a profit of $21,364 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.60%.

With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.

SCHX’s CAGR is 0.71 percentage points higher than that of USMV and as a result, would have yielded $3,757 more on a $10,000 investment. Thus, SCHX outperformed USMV by 0.71% annually.


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