The Schwab U.S. Large-Cap ETF (SCHX) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between SCHX and XLE? And which fund is better?
The expense ratio of SCHX is 0.09 percentage points lower than XLE’s (0.03% vs. 0.12%). SCHX also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHX has provided higher returns than XLE over the past ten years.
In this article, we’ll compare SCHX vs. XLE. We’ll look at holdings and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss SCHX’s and XLE’s risk metrics, industry exposure, and performance and examine how these affect their overall returns.
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|Name||Schwab U.S. Large-Cap ETF||Energy Select Sector SPDR Fund|
|Category||Large Blend||Equity Energy|
|Issuer||Schwab ETFs||SPDR State Street Global Advisors|
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.
SCHX’s dividend yield is 2.51% lower than that of XLE (1.41% vs. 3.92%). Also, SCHX yielded on average 13.32% more per year over the past decade (14.60% vs. 1.28%). The expense ratio of SCHX is 0.09 percentage points lower than XLE’s (0.03% vs. 0.12%).
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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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
SCHX is 25.13% more exposed to the Technology sector than XLE (25.13% vs 0.0%). SCHX’s exposure to Financial Services and Healthcare stocks is 13.82% higher and 13.04% higher respectively (13.82% vs. 0.0% and 13.04% vs. 0.0%). In total, Utilities, Energy, and Real Estate also make up 91.78% less of the fund’s holdings compared to XLE (8.22% vs. 100.00%).
|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%.
|Exxon Mobil Corp||23.7%|
|EOG Resources Inc||4.46%|
|Marathon Petroleum Corp||4.17%|
|Pioneer Natural Resources Co||4.08%|
|Kinder Morgan Inc Class P||3.85%|
|Williams Companies Inc||3.5%|
XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.
Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.
The Schwab U.S. Large-Cap ETF (SCHX) has a Beta of 1.02 with a Sharpe Ratio of 1.03 and a Mean Return of 1.24. Its Alpha is -0.14 while SCHX’s Standard Deviation is 13.8. Furthermore, the fund has a Treynor Ratio of 14.06 and a R-squared of 99.83.
The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a R-squared of 61.84 and a Sharpe Ratio of 0.12. Its Beta is 1.54 while XLE’s Alpha is -11.98. Furthermore, the fund has a Treynor Ratio of -0.4 and a Standard Deviation of 27.52.
SCHX’s Mean Return is 0.92 points higher than that of XLE and its R-squared is 37.99 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than XLE. The Alpha and Beta of SCHX are 11.84 points higher and 0.52 points lower than XLE’s Alpha and Beta.
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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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% 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 XLE, the end total would have been $7,674. This equates to a $-2,326 profit over 10 years and a compound annual growth rate (CAGR) of 1.28%.
SCHX’s CAGR is 13.32 percentage points higher than that of XLE and as a result, would have yielded $29,313 more on a $10,000 investment. Thus, SCHX outperformed XLE by 13.32% annually.
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