The Financial Select Sector SPDR Fund (XLF) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between XLF and SCHF? And which fund is better?
The expense ratio of XLF is 0.06 percentage points higher than SCHF’s (0.12% vs. 0.06%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided higher returns than SCHF over the past ten years.
In this article, we’ll compare XLF vs. SCHF. We’ll look at holdings and performance, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss XLF’s and SCHF’s fund composition, industry exposure, and annual returns and examine how these affect their overall returns.
|Name||Financial Select Sector SPDR Fund||Schwab International Equity ETF|
|Category||Financial||Foreign Large Blend|
|Issuer||SPDR State Street Global Advisors||Schwab ETFs|
The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.
The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.
XLF’s dividend yield is 0.59% lower than that of SCHF (1.57% vs. 2.16%). Also, XLF yielded on average 5.74% more per year over the past decade (12.17% vs. 6.43%). The expense ratio of XLF is 0.06 percentage points higher than SCHF’s (0.12% vs. 0.06%).
The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.
SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.
XLF is 82.15% more exposed to the Financial Services sector than SCHF (100.0% vs 17.85%). XLF’s exposure to Technology and Industrials stocks is 11.55% lower and 14.86% lower respectively (0.0% vs. 11.55% and 0.0% vs. 14.86%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 23.45% less of the fund’s holdings compared to SCHF (0.00% vs. 23.45%).
|Berkshire Hathaway Inc Class B||12.83%|
|JPMorgan Chase & Co||11.47%|
|Bank of America Corp||7.57%|
|Wells Fargo & Co||4.56%|
|Goldman Sachs Group Inc||3.15%|
|Charles Schwab Corp||2.66%|
|American Express Co||2.62%|
XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.
Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.
|Samsung Electronics Co Ltd||1.6%|
|ASML Holding NV||1.29%|
|Roche Holding AG||1.24%|
|Toyota Motor Corp||1.02%|
|LVMH Moet Hennessy Louis Vuitton SE||0.93%|
|Shopify Inc A||0.78%|
SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.
LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.
The Financial Select Sector SPDR Fund (XLF) has a Sharpe Ratio of 0.74 with a Standard Deviation of 18.86 and a Mean Return of 1.21. Its Treynor Ratio is 11.25 while XLF’s Alpha is 2.63. Furthermore, the fund has a R-squared of 73.26 and a Beta of 1.15.
The Schwab International Equity ETF (SCHF) has a Beta of 0.99 with a Alpha of 0.53 and a Sharpe Ratio of 0.42. Its Mean Return is 0.58 while SCHF’s Standard Deviation is 15.08. Furthermore, the fund has a R-squared of 98.16 and a Treynor Ratio of 5.39.
XLF’s Mean Return is 0.63 points higher than that of SCHF and its R-squared is 24.90 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than SCHF. The Alpha and Beta of XLF are 2.10 points higher and 0.16 points higher than SCHF’s Alpha and Beta.
XLF had its best year in 2013 with an annual return of 35.37%. XLF’s worst year over the past decade yielded -17.16% and occurred in 2011. In most years the Financial Select Sector SPDR Fund provided moderate returns such as in 2010, 2014, and 2017 where annual returns amounted to 11.97%, 15.02%, and 22.03% respectively.
The year 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLF would have resulted in a final balance of $27,491. This is a profit of $17,491 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.17%.
With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.
XLF’s CAGR is 5.74 percentage points higher than that of SCHF and as a result, would have yielded $10,402 more on a $10,000 investment. Thus, XLF outperformed SCHF by 5.74% annually.
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