SMBS vs SPY
Schwab Mortgage-Backed Securities ETF vs State Street SPDR S&P 500 ETF Trust
Quick Verdict
SMBS has a lower expense ratio. SPY delivered stronger 1-year returns. SMBS offers more diversification with 4175 holdings.
Side-by-Side Comparison
| Metric | SMBS | SPY | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.09% | |
| AUM | $6.5B | $789.1B | |
| Dividend Yield | 5.14% | 1.01% | |
| Holdings | 4,175 | 505 | |
| YTD Return | +0.41% | +14.47% | |
| 1Y Return | +3.56% | +21.96% | |
| 3Y Return (annualized) | - | +21.70% | |
| 5Y Return (annualized) | - | +13.30% | |
| Volatility (annualized) | 3.6% | 15.3% | |
| Max Drawdown | -3.2% | -56.5% | |
| Fund Family | Charles Schwab Asset Management | State Street Investment Management | |
| Category | Fixed Income | Equity | |
| Inception | Nov 19, 2024 | Jan 22, 1993 |
SMBS vs SPY Performance
Schwab Mortgage-Backed Securities ETF (SMBS) is a ETF from Charles Schwab Asset Management and State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management. Over the past year SMBS returned +3.56% while SPY returned +21.96%. Year to date, SMBS is up 0.41% versus a gain of 14.47% for SPY.
Risk: Volatility and Drawdowns
SPY has been the more volatile fund, with annualized monthly volatility of 15.3% compared with 3.6% for SMBS. 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 -3.2% for SMBS and -56.5% for SPY. 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 0.23. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
SMBS charges 0.03% per year while SPY charges 0.09%. On a $10,000 position that is $3 vs $9 annually, a gap of $6 per year that compounds over a long holding period. On income, SMBS currently yields 5.14% against 1.01% for SPY.
Frequently Asked Questions
Which is cheaper, SMBS or SPY?
SMBS has an expense ratio of 0.03% while SPY charges 0.09%. SMBS is the cheaper option. On a $10,000 investment, that is $6 per year of difference.
Which performed better, SMBS or SPY?
Over the past year SMBS returned +3.56% vs +21.96% for SPY, so SPY leads on 1-year performance. Over the longest common window we track (2 years), SMBS annualized +4.47% vs +8.87% for SPY. Past performance does not guarantee future results.
Which is riskier, SMBS or SPY?
SPY has been the more volatile fund at 15.3% annualized versus 3.6% for SMBS. Worst drawdown: SMBS -3.2% vs SPY -56.5%.
Should I hold both SMBS and SPY?
SMBS and SPY have a monthly-return correlation of 0.23, so combining them can provide real diversification depending on your allocation goals.
Which pays a higher dividend, SMBS or SPY?
SMBS yields 5.14% while SPY yields 1.01%, so SMBS currently pays the higher dividend yield.
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