FAAR vs SCHQ
First Trust Alternative Absolute Return Strategy ETF vs Schwab Long-Term US Treasury ETF
Quick Verdict
SCHQ has a lower expense ratio. FAAR delivered stronger 1-year returns. SCHQ offers more diversification with 98 holdings.
Side-by-Side Comparison
| Metric | FAAR | SCHQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.03% | |
| AUM | $191M | $806M | |
| Dividend Yield | 9.19% | 4.73% | |
| Holdings | 6 | 98 | |
| YTD Return | +15.76% | -3.13% | |
| 1Y Return | +20.43% | -1.31% | |
| 3Y Return (annualized) | +9.16% | +0.11% | |
| 5Y Return (annualized) | +7.39% | -6.81% | |
| Volatility (annualized) | 9.1% | 13.5% | |
| Max Drawdown | -18.8% | -46.7% | |
| Fund Family | First Trust Portfolios (US) | Charles Schwab Asset Management | |
| Category | Commodity | Fixed Income | |
| Inception | May 18, 2016 | Oct 10, 2019 |
FAAR vs SCHQ Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Schwab Long-Term US Treasury ETF (SCHQ) is a ETF from Charles Schwab Asset Management. Over the past year FAAR returned +20.43% while SCHQ returned -1.31%. Year to date, FAAR is up 15.76% versus a loss of 3.13% for SCHQ.
Over three years, FAAR compounded at +9.16% per year against +0.11% for SCHQ; over five years the annualized figures are +7.39% and -6.81% respectively. Across the full 7-year window we track, FAAR has the edge at +3.48% annualized vs -4.48%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
SCHQ has been the more volatile fund, with annualized monthly volatility of 13.5% compared with 9.1% for FAAR. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.8% for FAAR and -46.7% for SCHQ. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at -0.15. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while SCHQ charges 0.03%. On a $10,000 position that is $97 vs $3 annually, a gap of $94 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 4.73% for SCHQ.
Frequently Asked Questions
Which is cheaper, FAAR or SCHQ?
FAAR has an expense ratio of 0.97% while SCHQ charges 0.03%. SCHQ is the cheaper option. On a $10,000 investment, that is $94 per year of difference.
Which performed better, FAAR or SCHQ?
Over the past year FAAR returned +20.43% vs -1.31% for SCHQ, so FAAR leads on 1-year performance. Over the longest common window we track (7 years), FAAR annualized +3.48% vs -4.48% for SCHQ. Past performance does not guarantee future results.
Which is riskier, FAAR or SCHQ?
SCHQ has been the more volatile fund at 13.5% annualized versus 9.1% for FAAR. Worst drawdown: FAAR -18.8% vs SCHQ -46.7%.
Should I hold both FAAR and SCHQ?
FAAR and SCHQ have a monthly-return correlation of -0.15, so combining them can provide real diversification depending on your allocation goals.
Which pays a higher dividend, FAAR or SCHQ?
FAAR yields 9.19% while SCHQ yields 4.73%, so FAAR currently pays the higher dividend yield.
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