SCHG vs SCHX: Understanding the Differences
LAST UPDATED: May 23, 2023 | By Conrad Golly
If you’re looking to invest in a large-cap ETF, you’ve probably come across SCHG and SCHX.
I can provide some insight into the differences between these two ETFs.
Both are offered by Schwab, but they have different investment strategies and goals. SCHG vs SCHX:
SCHG is the Schwab U.S. Large-Cap Growth ETF, which focuses on large-cap growth companies.
This means that the fund invests in companies that are expected to have high earnings growth in the future, and typically these companies reinvest earnings back into the company rather than paying dividends.
On the other hand, SCHX is the Schwab U.S. Large-Cap ETF, which provides exposure to large-cap U.S. companies across all sectors. This fund aims to track the performance of the Dow Jones U.S. Large-Cap Total Stock Market Index.
So, which one is better?
That depends on your investment goals and risk tolerance. SCHG may be a better option for investors seeking higher returns and are willing to take on more risk.
On the other hand, SCHX may be a better choice for investors seeking a more diversified portfolio with lower risk.
Let’s take a closer look at the differences between these two ETFs to help you make a more informed investment decision.
Table of Contents
Comparison of SCHG vs SCHX ETFs
As I compare the Schwab U.S. Large-Cap Growth ETF (SCHG) and the Schwab U.S. Large-Cap ETF (SCHX), I find that both ETFs are designed to track the performance of the U.S. large-cap stocks.
However, there are some notable differences between the two ETFs that investors need to be aware of before making an investment decision.
One of the main differences between SCHG and SCHX is their investment strategy.
SCHG is a growth-oriented ETF that focuses on companies with high growth potential, while SCHX is a broader-based ETF that invests in a mix of value and growth stocks.
This means that SCHG may offer higher returns during bull markets, but it may also be more volatile during market downturns.
Another difference between the two ETFs is their expense ratio. SCHG has a slightly higher expense ratio of 0.04%, while SCHX has an expense ratio of 0.03%.
While this may seem like a small difference, it can add up over time and impact an investor’s returns.
When it comes to performance, SCHG has outperformed SCHX over the past 10 years, with an annualized return of 14.18% compared to SCHX’s 11.89%.
However, in the year-to-date period, SCHX has achieved a 7.05% return, which is significantly lower than SCHG’s 15.71% return.
Below is a table that summarizes the key differences between SCHG and SCHX:
| SCHG | SCHX | |
|---|---|---|
| Investment Strategy | Growth-oriented | Value and Growth |
| Expense Ratio | 0.04% | 0.03% |
| Performance (10-year Annualized Return) | 14.18% | 11.89% |
| Year-to-Date Return | 15.71% | 7.05% |
Ultimately, the decision to invest in SCHG or SCHX will depend on an investor’s risk tolerance, investment goals, and overall investment strategy.
While SCHG may offer higher returns, it may also be more volatile, and investors should be prepared for potential market downturns.
SCHX, on the other hand, may offer a more balanced approach, but may not provide the same level of growth potential as SCHG.
Suitability of SCHG vs SCHX ETFs
As an investor, it’s important to determine which ETF is best suited for your investment goals and risk tolerance.
Both SCHG and SCHX are excellent choices for long-term investors seeking exposure to the US equity market.
However, each ETF has its own unique characteristics that may make one more suitable than the other for your investment needs.
SCHG is a large-cap growth ETF designed to track the performance of the Dow Jones US Large-Cap Growth Total Stock Market Index.
It invests in companies with high growth potential, which can lead to higher returns but also higher risk. SCHG is suitable for investors who are willing to take on more risk in exchange for potentially higher returns.
SCHX, on the other hand, is a large-cap blend ETF that tracks the performance of the Dow Jones US Large-Cap Total Stock Market Index.
It invests in a mix of growth and value companies, providing a more balanced exposure to the US equity market. SCHX is suitable for investors who want exposure to the US equity market but with a lower risk profile.
Below is a table comparing the key characteristics of SCHG vs SCHX:
| ETF | Expense Ratio | Dividend Yield | Performance (YTD) |
|---|---|---|---|
| SCHG | 0.04% | 0.63% | 15.71% |
| SCHX | 0.03% | 1.53% | 7.05% |
As you can see, SCHG has a higher expense ratio but also a higher dividend yield and YTD performance.
SCHX, on the other hand, has a lower expense ratio but also a lower dividend yield and YTD performance.
It’s important to consider these factors when deciding which ETF is best suited for your investment needs.
Both SCHG and SCHX are excellent choices for long-term investors seeking exposure to the US equity market.
However, each ETF has its own unique characteristics that make one more suitable than the other for certain investors.
It’s important to carefully consider your investment goals and risk tolerance before making a decision.
SCHG vs SCHX: Fund Composition
When comparing SCHG and SCHX, it’s important to look at the composition of each fund. SCHG is a large-cap growth fund, while SCHX is a large-cap total stock market fund.
This means that SCHG invests in companies that are expected to grow at a faster rate than the overall market, while SCHX invests in a broader range of companies that make up the entire market.
SCHG Holdings
SCHG’s top holdings include companies like Apple, Microsoft, Amazon, and Facebook, which are all well-known for their rapid growth and innovation.
SCHX Holdings
In contrast, SCHX’s top holdings include companies like Microsoft, Apple, Amazon, and Alphabet, which are all large-cap companies that have a significant impact on the overall market.
One key difference between SCHG and SCHX is their sector allocation. SCHG has a higher allocation to the technology sector, which makes up over 40% of the fund’s holdings.
This is not surprising, given that many of the companies in the technology sector are known for their rapid growth and innovation.
In contrast, SCHX has a more balanced sector allocation, with the technology sector making up around 26% of the fund’s holdings.
Another important factor to consider when looking at fund composition is the expense ratio. SCHG has a lower expense ratio than SCHX, which means that investors will pay less in fees to invest in the fund.
However, it’s important to note that both funds have very low expense ratios compared to other funds in their category.
The composition of SCHG and SCHX is quite different. While both funds invest in large-cap companies, SCHG focuses on growth companies that are expected to outperform the market, while SCHX invests in a broader range of companies that make up the entire market.
Investors should consider their investment goals and risk tolerance when deciding which fund is right for them.
SCHG vs SCHX: Industry Exposure
When comparing SCHG and SCHX, it is important to examine the industry exposure of each ETF.
SCHG is a large-cap growth ETF that invests in companies with strong earnings growth potential, while SCHX is a large-cap ETF that tracks the performance of the Dow Jones U.S. Large-Cap Total Stock Market Index.
SCHG has a higher exposure to the technology sector, with 39.21% of its holdings in this industry. In contrast, SCHX has a lower exposure to the technology sector, with only 25.13% of its holdings in this industry.
This means that SCHG is more heavily invested in technology companies than SCHX.
However, SCHX has a more diverse sector exposure than SCHG.
As Seeking Alpha notes, SCHX is less concentrated in the technology sector, which allows it to have a more diversified sector exposure. This diversity can help to reduce risk and increase stability in an investment portfolio.
Looking at the top ten holdings of each ETF can provide further insight into their industry exposure.
The top ten holdings of SCHG include companies such as Apple, Microsoft, Amazon, and Facebook, which are all technology companies. In contrast, the top ten holdings of SCHX include companies such as Apple, Microsoft, Johnson & Johnson, and JPMorgan Chase, which are spread across multiple industries.
In conclusion, while SCHG has a higher exposure to the technology sector than SCHX, SCHX has a more diverse sector exposure.
Investors should consider their investment goals and risk tolerance when choosing between these two ETFs.
SCHG vs SCHX: Performance
When it comes to comparing the performance of SCHG and SCHX, there are a few things to keep in mind. First and foremost, both ETFs have performed well over the past few years, with strong returns and consistent growth.
However, there are some key differences to consider.
One way to compare the performance of these two ETFs is to look at their returns over different time periods. For example, over the past year, SCHG has returned 21.6%, while SCHX has returned 18.2%.
However, over the past five years, SCHX has actually outperformed SCHG, with an average annual return of 16.5% compared to SCHG’s 15.4%.
Another way to compare the performance of these ETFs is to look at their holdings. As we mentioned earlier, SCHG focuses on large-cap growth stocks, while SCHX tracks the performance of the entire S&P 500 index.
This means that SCHG is more heavily weighted towards technology and consumer discretionary stocks, while SCHX has a more diversified portfolio that includes stocks from a variety of sectors.
| SCHG | SCHX | |
|---|---|---|
| Average Annual Return (5 years) | 15.4% | 16.5% |
| Expense Ratio | 0.04% | 0.03% |
| Top Holdings | Apple, Microsoft, Amazon | Apple, Microsoft, Amazon |
It’s also worth noting that SCHX has a slightly lower expense ratio than SCHG, which could make it a more attractive option for investors looking to minimize fees and maximize returns.
Overall, both SCHG and SCHX have proven to be strong performers in their own right.
The best choice for you will depend on your investment goals, risk tolerance, and other factors.
However, by considering the differences in their performance and holdings, you can make an informed decision that aligns with your investment strategy.
SCHG vs SCHX: Portfolio Growth
When it comes to investing, one of the most important factors to consider is portfolio growth.
After all, the goal of investing is to make money, and the more your portfolio grows, the more successful your investments have been. So, how do SCHG and SCHX compare in terms of portfolio growth?
Let’s take a look at some historical data to see how each ETF has performed over time.
A $10,000 investment in SCHX would have resulted in a final balance of $36,987 over 10 years, representing a compound annual growth rate (CAGR) of 14.60%.
On the other hand, the same investment in SCHG would have resulted in a final balance of $47,556, with a CAGR of 16.74%. This means that, historically, SCHG has outperformed SCHX in terms of portfolio growth.
Of course, past performance is not a guarantee of future results, and there are many factors that can influence the growth of a portfolio.
However, it’s worth noting that SCHG has a higher expense ratio than SCHX, which means that investors are paying more in fees to hold the fund.
This could potentially eat into any gains made by the ETF, and may be a factor to consider when deciding between the two.
Another factor to consider is the composition of each ETF. As we discussed earlier, SCHG focuses on large-cap growth stocks, while SCHX includes a broader range of large-cap stocks.
Depending on market conditions, growth stocks may outperform value stocks or vice versa, which could impact the performance of each ETF.
However, over the long term, growth stocks have historically outperformed value stocks, which could be a point in favor of SCHG.
While past performance is not a guarantee of future results, historical data suggests that SCHG has outperformed SCHX in terms of portfolio growth.
SCHG vs SCHX: Risk Metrics
When comparing SCHG vs SCHX, it’s important to consider the risk metrics associated with each ETF. Both ETFs are designed to track the performance of large-cap U.S. stocks, but they have some key differences that can affect risk levels.
One important metric to consider is the expense ratio. SCHG has a slightly higher expense ratio than SCHX, which means that investors will pay slightly more in fees to hold the fund.
However, SCHG also has a higher dividend yield than SCHX, which can help offset some of the higher fees.
Another important metric to consider is the sector breakdown of each ETF.
SCHG has a higher concentration of technology stocks than SCHX, which can make it more volatile during market downturns. On the other hand, SCHX has a more balanced sector breakdown, which can help mitigate risk.
It’s also important to consider the historical performance of each ETF during periods of market volatility.
During the COVID-19 pandemic in 2020, both SCHG and SCHX experienced significant losses, but SCHG recovered more quickly and ended the year with a higher total return than SCHX.
Wrapping It Up: SCHG vs SCHX
After analyzing the differences between schx vs schg, I have come to the conclusion that both ETFs have their respective advantages and disadvantages.
The choice between the two ultimately depends on the investor’s individual risk tolerance and investment goals.
For investors seeking exposure to the technology sector, SCHG may be the better option due to its higher concentration in IT.
However, for those looking for a more diversified sector exposure, SCHX may be the way to go.
Additionally, SCHX has a lower expense ratio and standard deviation compared to SCHG.
| ETF | Expense Ratio | IT Weighting | Standard Deviation |
|---|---|---|---|
| SCHG | 0.04% | 40.5% | 4.61% |
| SCHX | 0.03% | 23.4% | 4.06% |
Ultimately, the decision between SCHG and SCHX comes down to the individual investor’s preferences and investment strategy.
Both ETFs offer exposure to large-cap US equities and have their respective strengths and weaknesses. It is important to carefully consider these factors before making a decision to invest in either ETF.
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