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USMV vs. SCHB: What’s The Difference?

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

The expense ratio of USMV is 0.12 percentage points higher than SCHB’s (0.15% vs. 0.03%). USMV also has a lower exposure to the technology sector and a lower standard deviation. Overall, USMV has provided lower returns than SCHB over the past 8 years.

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

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Summary

USMVSCHB
NameiShares MSCI USA Min Vol Factor ETFSchwab U.S. Broad Market ETF
CategoryLarge BlendLarge Blend
IssueriSharesSchwab ETFs
AUM27.6B21.44B
Avg. Return13.89%14.43%
Div. Yield1.5%1.39%
Expense Ratio0.15%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%.

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

USMV’s dividend yield is 0.11% higher than that of SCHB (1.5% vs. 1.39%). Also, USMV yielded on average 0.54% less per year over the past decade (13.89% vs. 14.43%). The expense ratio of USMV is 0.12 percentage points higher than SCHB’s (0.15% vs. 0.03%).

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Fund Composition

Industry Exposure

USMV vs. SCHB - Industry Exposure

USMVSCHB
Technology20.53%24.15%
Industrials10.51%9.29%
Energy0.21%2.78%
Communication Services11.03%10.52%
Utilities6.93%2.32%
Healthcare18.42%13.37%
Consumer Defensive12.82%5.76%
Real Estate2.73%3.58%
Financial Services9.65%13.88%
Consumer Cyclical5.53%11.9%
Basic Materials1.65%2.45%

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%.

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

USMV is 3.62% less exposed to the Technology sector than SCHB (20.53% vs 24.15%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 5.05% higher and 7.06% higher respectively (18.42% vs. 13.37% and 12.82% vs. 5.76%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 8.02% less of the fund’s holdings compared to SCHB (9.91% vs. 17.93%).

Holdings

USMV - Holdings

USMV HoldingsWeight
Eli Lilly and Co1.64%
Microsoft Corp1.62%
T-Mobile US Inc1.51%
Accenture PLC Class A1.51%
Visa Inc Class A1.49%
Waste Management Inc1.45%
Adobe Inc1.45%
The Kroger Co1.44%
Johnson & Johnson1.42%
Gilead Sciences Inc1.42%

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%.

SCHB - Holdings

SCHB HoldingsWeight
Apple Inc4.86%
Microsoft Corp4.61%
Amazon.com Inc3.33%
Facebook Inc A1.88%
Alphabet Inc A1.66%
Alphabet Inc Class C1.61%
Berkshire Hathaway Inc Class B1.19%
Tesla Inc1.18%
NVIDIA Corp1.13%
JPMorgan Chase & Co1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

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Risk Analysis

USMVSCHB
Mean Return01.23
R-squared099.33
Std. Deviation014.12
Alpha0-0.58
Beta01.04
Sharpe Ratio01
Treynor Ratio013.58

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

The Schwab U.S. Broad Market ETF (SCHB) has a Sharpe Ratio of 1 with a Alpha of -0.58 and a Mean Return of 1.23. Its Beta is 1.04 while SCHB’s Treynor Ratio is 13.58. Furthermore, the fund has a R-squared of 99.33 and a Standard Deviation of 14.12.

USMV’s Mean Return is 1.23 points lower than that of SCHB and its R-squared is 99.33 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than SCHB. The Alpha and Beta of USMV are 0.58 points higher and 1.04 points lower than SCHB’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. SCHB - Annual Returns

YearUSMVSCHB
20205.6%20.77%
201927.77%30.94%
20181.36%-5.25%
201718.97%21.18%
201610.5%12.56%
20155.5%0.45%
201416.34%12.67%
201325.11%33.37%
201211.04%16.22%
20110.0%1.4%
20100.0%17.1%

USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% respectively.

The year 2013 was the strongest year for SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.

Portfolio Growth

USMV vs. SCHB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
USMV$10,000$27,60713.89%
SCHB$10,000$30,84914.43%

A $10,000 investment in USMV would have resulted in a final balance of $27,607. This is a profit of $17,607 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.89%.

With a $10,000 investment in SCHB, the end total would have been $30,849. This equates to a $20,849 profit over 8 years and a compound annual growth rate (CAGR) of 14.43%.

USMV’s CAGR is 0.54 percentage points lower than that of SCHB and as a result, would have yielded $3,242 less on a $10,000 investment. Thus, USMV performed worse than SCHB by 0.54% annually.


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