SCHX vs. XLI: What’s The Difference?

The Schwab U.S. Large-Cap ETF (SCHX) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between SCHX and XLI? And which fund is better?

The expense ratio of SCHX is 0.09 percentage points lower than XLI’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 XLI over the past ten years.

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

Summary

SCHX XLI
Name Schwab U.S. Large-Cap ETF Industrial Select Sector SPDR Fund
Category Large Blend Industrials
Issuer Schwab ETFs SPDR State Street Global Advisors
AUM 30.89B 19.33B
Avg. Return 14.60% 14.44%
Div. Yield 1.41% 1.25%
Expense Ratio 0.03% 0.12%

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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

SCHX’s dividend yield is 0.16% higher than that of XLI (1.41% vs. 1.25%). Also, SCHX yielded on average 0.16% more per year over the past decade (14.60% vs. 14.44%). The expense ratio of SCHX is 0.09 percentage points lower than XLI’s (0.03% vs. 0.12%).

Fund Composition

Industry Exposure

SCHX vs. XLI - Industry Exposure

SCHX XLI
Technology 25.13% 1.82%
Industrials 8.65% 97.49%
Energy 2.72% 0.0%
Communication Services 11.26% 0.0%
Utilities 2.37% 0.0%
Healthcare 13.04% 0.0%
Consumer Defensive 5.97% 0.0%
Real Estate 3.13% 0.0%
Financial Services 13.82% 0.0%
Consumer Cyclical 11.63% 0.69%
Basic Materials 2.28% 0.0%

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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

SCHX is 23.31% more exposed to the Technology sector than XLI (25.13% vs 1.82%). 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 8.22% more of the fund’s holdings compared to XLI (8.22% vs. 0.00%).

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%.

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

Risk Analysis

SCHX XLI
Mean Return 1.24 1.14
R-squared 99.83 78.97
Std. Deviation 13.8 17.13
Alpha -0.14 2.38
Beta 1.02 1.08
Sharpe Ratio 1.03 0.76
Treynor Ratio 14.06 11.34

The Schwab U.S. Large-Cap ETF (SCHX) has a Standard Deviation of 13.8 with a Alpha of -0.14 and a Treynor Ratio of 14.06. Its R-squared is 99.83 while SCHX’s Mean Return is 1.24. Furthermore, the fund has a Sharpe Ratio of 1.03 and a Beta of 1.02.

The Industrial Select Sector SPDR Fund (XLI) has a Sharpe Ratio of 0.76 with a R-squared of 78.97 and a Mean Return of 1.14. Its Beta is 1.08 while XLI’s Alpha is 2.38. Furthermore, the fund has a Treynor Ratio of 11.34 and a Standard Deviation of 17.13.

SCHX’s Mean Return is 0.10 points higher than that of XLI and its R-squared is 20.86 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than XLI. The Alpha and Beta of SCHX are 2.52 points lower and 0.06 points lower than XLI’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. XLI - Annual Returns

Year SCHX XLI
2020 20.9% 11.0%
2019 31.4% 29.11%
2018 -4.52% -13.1%
2017 21.91% 23.85%
2016 11.78% 19.93%
2015 1.02% -4.27%
2014 13.33% 10.44%
2013 32.54% 40.44%
2012 16.06% 14.86%
2011 1.61% -1.01%
2010 15.88% 27.62%

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 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

SCHX vs. XLI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
XLI $10,000 $31,228 14.44%

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 XLI, the end total would have been $31,228. This equates to a $21,228 profit over 10 years and a compound annual growth rate (CAGR) of 14.44%.

SCHX’s CAGR is 0.16 percentage points higher than that of XLI and as a result, would have yielded $5,759 more on a $10,000 investment. Thus, SCHX outperformed XLI by 0.16% annually.


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