USMV vs. SCHG: What’s The Difference?

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

The expense ratio of USMV is 0.11 percentage points higher than SCHG’s (0.15% vs. 0.04%). USMV also has a lower exposure to the technology sector and a lower standard deviation. Overall, USMV has provided lower returns than SCHG over the past 8 years.

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

Summary

USMV SCHG
Name iShares MSCI USA Min Vol Factor ETF Schwab U.S. Large-Cap Growth ETF
Category Large Blend Large Growth
Issuer iShares Schwab ETFs
AUM 27.6B 15.16B
Avg. Return 13.89% 17.81%
Div. Yield 1.5% 0.43%
Expense Ratio 0.15% 0.04%

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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

USMV’s dividend yield is 1.07% higher than that of SCHG (1.5% vs. 0.43%). Also, USMV yielded on average 3.92% less per year over the past decade (13.89% vs. 17.81%). The expense ratio of USMV is 0.11 percentage points higher than SCHG’s (0.15% vs. 0.04%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

USMV vs. SCHG - Industry Exposure

USMV SCHG
Technology 20.53% 39.21%
Industrials 10.51% 3.01%
Energy 0.21% 0.2%
Communication Services 11.03% 17.07%
Utilities 6.93% 0.0%
Healthcare 18.42% 12.05%
Consumer Defensive 12.82% 2.15%
Real Estate 2.73% 1.64%
Financial Services 9.65% 7.98%
Consumer Cyclical 5.53% 15.01%
Basic Materials 1.65% 1.68%

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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

USMV is 18.68% less exposed to the Technology sector than SCHG (20.53% vs 39.21%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 6.37% higher and 10.67% higher respectively (18.42% vs. 12.05% and 12.82% vs. 2.15%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 8.42% less of the fund’s holdings compared to SCHG (9.91% vs. 18.33%).

Holdings

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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

USMV SCHG
Mean Return 0 1.46
R-squared 0 92.92
Std. Deviation 0 14.78
Alpha 0 1.97
Beta 0 1.05
Sharpe Ratio 0 1.14
Treynor Ratio 0 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Standard Deviation of 14.78 with a Sharpe Ratio of 1.14 and a Treynor Ratio of 16.3. Its Beta is 1.05 while SCHG’s Mean Return is 1.46. Furthermore, the fund has a Alpha of 1.97 and a R-squared of 92.92.

USMV’s Mean Return is 1.46 points lower than that of SCHG and its R-squared is 92.92 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than SCHG. The Alpha and Beta of USMV are 1.97 points lower and 1.05 points lower than SCHG’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

USMV vs. SCHG - Annual Returns

Year USMV SCHG
2020 5.6% 39.13%
2019 27.77% 36.21%
2018 1.36% -1.35%
2017 18.97% 28.04%
2016 10.5% 6.76%
2015 5.5% 3.26%
2014 16.34% 15.74%
2013 25.11% 33.96%
2012 11.04% 17.02%
2011 0.0% -0.67%
2010 0.0% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

USMV vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
SCHG $10,000 $40,913 17.81%

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 SCHG, the end total would have been $40,913. This equates to a $30,913 profit over 8 years and a compound annual growth rate (CAGR) of 17.81%.

USMV’s CAGR is 3.92 percentage points lower than that of SCHG and as a result, would have yielded $13,306 less on a $10,000 investment. Thus, USMV performed worse than SCHG by 3.92% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply