The Schwab U.S. Large-Cap ETF (SCHX) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. SCHX is a Schwab ETFs Large Blend fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between SCHX and XLV? And which fund is better?
The expense ratio of SCHX is 0.09 percentage points lower than XLV’s (0.03% vs. 0.12%). SCHX also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHX has provided lower returns than XLV over the past ten years.
In this article, we’ll compare SCHX vs. XLV. We’ll look at holdings and performance, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss SCHX’s and XLV’s fund composition, portfolio growth, and risk metrics and examine how these affect their overall returns.
|Name||Schwab U.S. Large-Cap ETF||Health Care Select Sector SPDR Fund|
|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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
SCHX’s dividend yield is 0.01% higher than that of XLV (1.41% vs. 1.4%). Also, SCHX yielded on average 0.42% less per year over the past decade (14.60% vs. 15.02%). The expense ratio of SCHX is 0.09 percentage points lower than XLV’s (0.03% vs. 0.12%).
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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.
XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, Energy, 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 XLV (25.13% vs 0.0%). SCHX’s exposure to Financial Services and Healthcare stocks is 13.82% higher and 86.96% lower respectively (13.82% vs. 0.0% and 13.04% vs. 100.0%). In total, Utilities, Energy, and Real Estate also make up 8.22% more of the fund’s holdings compared to XLV (8.22% vs. 0.00%).
|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%.
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
The Schwab U.S. Large-Cap ETF (SCHX) has a Sharpe Ratio of 1.03 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 Standard Deviation of 13.8 and a Beta of 1.02.
The Health Care Select Sector SPDR Fund (XLV) has a Beta of 0.7 with a Mean Return of 1.27 and a Sharpe Ratio of 1.13. Its R-squared is 58.19 while XLV’s Standard Deviation is 12.94. Furthermore, the fund has a Treynor Ratio of 21.1 and a Alpha of 7.75.
SCHX’s Mean Return is 0.03 points lower than that of XLV and its R-squared is 41.64 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than XLV. The Alpha and Beta of SCHX are 7.89 points lower and 0.32 points higher than XLV’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 2013 was the strongest year for XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% 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 XLV, the end total would have been $42,899. This equates to a $32,899 profit over 10 years and a compound annual growth rate (CAGR) of 15.02%.
SCHX’s CAGR is 0.42 percentage points lower than that of XLV and as a result, would have yielded $5,912 less on a $10,000 investment. Thus, SCHX performed worse than XLV by 0.42% annually.
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