IWM vs SCHA: Which ETF Is Better in 2026?
A metric-by-metric comparison of iShares Russell 2000 ETF (IWM) and Schwab U.S. Small-Cap ETF (SCHA) — both US Small Cap funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
IWM and SCHA are close to the same fund wearing different labels. Both sit in the US Small Cap category and their daily returns move almost identically, so this is not really a question of which fund is better — it is a question of which one is cheaper to own and easier to trade in your account. Everything below is about finding the small, structural edges, because the investment exposure is a wash.
IWM and SCHA score almost identically on ETFValuer's model (72.0 vs. 72.0) — the honest answer is that either is a reasonable choice, and the decision comes down to the secondary factors below rather than the headline grade.
Head-to-Head: Every Metric
| IWM | SCHA | |
|---|---|---|
| Category | US Small Cap | US Small Cap |
| Expense ratio | 0.19% | 0.03% |
| Fund size (AUM) | $83.0B | $24.2B |
| Dividend yield | 0.69% | 0.99% |
| 1-year return | +29.78% | +29.42% |
| 3-year return | +51.81% | +53.46% |
| Volatility | 19.36% | 19.05% |
| Max drawdown | -27.50% | -27.29% |
| Sharpe ratio | 1.28 | 1.28 |
| ETFValuer score | 72.0 | 72.0 |
| Grade | B | B |
| Overall rank | #83 | #84 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
SCHA is the cheaper fund, charging 0.03% a year versus 0.19% for IWM — a gap of 0.16 percentage points (about $16.00/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. Since these two deliver almost the same exposure, that fee gap is close to the entire difference between them — it comes straight out of your return with nothing offered in exchange. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What IWM's Fees Cost You
IWM charges an expense ratio of 0.19% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, SCHA returned +53.46% versus +51.81% for IWM — a gap of about 1.6 percentage points. On risk, SCHA has held up better historically, with a shallower max drawdown (-27.29% vs. -27.50%). SCHA currently has the better risk-adjusted return (Sharpe ratio of 1.28 vs. 1.28), meaning it delivered more return per unit of volatility taken on. Read that gap sceptically: for funds tracking near-identical exposure, a 1.6-point difference over three years is mostly noise from fee drag and timing, not evidence that one manager is better than the other.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), IWM and SCHA show a extremely high correlation of 0.986 — very close substitutes. Holding both would add very little diversification: when one falls, the other almost always falls with it. Treat these as alternatives to each other, not as complements in the same portfolio.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.986 | Extremely high — very close substitutes |
| R-squared | 97.3% | 97.3% of IWM's daily moves are explained by SCHA's |
| Tracking error (annualised) | 3.52% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | IWM +15.79% · SCHA +16.01% | SCHA ahead by 0.23 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, IWM finished as much as +2.9 points ahead of SCHA at the best extreme and -3.8 points at the worst — a 6.7-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
IWM and SCHA hold 1 of the same companies among their top 10 positions. Those shared names make up 0.4% of IWM and 0.4% of SCHA. That's modest duplication — the funds are mostly distinct at the top, so holding both can still add diversification.
| Shared Holding | IWM Weight | SCHA Weight |
|---|---|---|
| Coeur Mining, Inc. | 0.42% | 0.42% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean IWM if…
- You want the deeper, more liquid market ($83B in assets vs $24B) and the tighter spread (0.003% vs 0.413%)
Lean SCHA if…
- You want the lower running cost — 0.03% vs 0.19%, about $16 a year less on a $10,000 position
- Current income matters to you — it yields 0.99% against 0.69%
- You weight recent results heavily — it returned 53.5% over 3 years against 51.8%
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is IWM or SCHA better?
They're rated almost identically by ETFValuer's model — check the cost and risk sections above for the deciding factor that matters most to you.
Which has the lower expense ratio, IWM or SCHA?
SCHA currently has the lower expense ratio (0.03% vs. 0.19%).
Can I hold both IWM and SCHA?
You can, but there's little point. IWM and SCHA have a daily return correlation of 0.99 over the past 3.0 years, meaning they move almost in lockstep. Holding both roughly doubles a single bet rather than spreading it — pick whichever wins on cost and liquidity and put the money in one place.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.