Minafi's Take on RCRYX vs SCHZ
Here's an in depth look at the differences between Pioneer Dynamic Credit Fund Class Y ($RCRYX) and Schwab U.S. Aggregate Bond ETF ($SCHZ).
To start off, here's a look at the basics of each fund. Keep an eye on the FI Score. That's a custom score from 0 to 100 that we generate based on how good this fund is for the casual investor. Most investors only need a handful of total funds in their portfolio. The higher the score, the more likely this is one of those few. Score alone isn't enough! Keep reading on to see how different (or perhaps similar) these two funds are.
- rcryx
- Mutual Fund
- Bond
- Total US Bond Market
Pioneer Dynamic Credit Fund Class Y
Expenses: 0.85% (Better than 0% of similar funds)
This is a bad choice for a Total US Bond Market Bond fund. See why »
- schz
- ETF
- Bond
- Total US Bond Market
Schwab U.S. Aggregate Bond ETF
Expenses: 0.04% (Better than 1% of similar funds)
This is a great choice for a Total US Bond Market Bond fund. See why »
$RCRYX is classified as a Mutual Fund while $SCHZ is classified as an ETF. Even though one of these is a mutual fund and the other is an ETF, that doesn't matter too much for their holdings. Both ETFs and mutual funds are just containers to hold lots of investments inside of them.
The biggest differences between these two is where they may be offered. ETFs are more widely availble from a larger number of investment apps and websites. Mutual funds, on the other hand, are generally offered by the platform they're issued by (Fidelity funds on Fidelity, Vanguard funds on Vanguard). Usually 401(k)'s will offer both ETFs and Mutual Funds. If you're investing outside of a 401(k), I'd recommend you verify the fees associated with ETF and mutual fund transactions. Some platforms charge an additional fee to purchase a mutual fund.
To learn more about the difference between these two, you can read about the difference between ETFs and Mutual Funds.
When evaluating a fund, the first things I look at are:
- What it invests in
- How much it charges in fees
- How large the fund is
Let's look into these criteria one by one and see if either of these funds stands out.
Fund Holdings Comparison
Both of these funds are Bond Total US Bond Market funds – which means they're likely both investing in about the same investments behind the scenes.
Minafi's FI Score algorithm takes into account the category and market. The more niche a fund is, the lower the score. This doesn't mean it's a worse fund, but it does mean you should stop and make sure this a fund you need to diversify your portfolio.
| RCRYX | SCHZ | |
|---|---|---|
| Market Score | 1.5 /10 | 8.6 /10 |
| Category Score | 10.0 /10 | 10.0 /10 | Total | 11.5 | 18.6 |
A score of 10 means this is a solid market and category that almost every investor will want to have investments in. The lower the score, the more specific the investment. These scores are based on when most investors would add these funds to their portfolio. A score of 10 means that this fund (or one like it) belongs in a three-fund portfolio. The lower the score, the farther down in your portfolio a fund would go.
Winner: $SCHZ
Fee Comparison
Fees are one of the biggest killers of portfolio growth. The difference between a 2% fee and a 0.04% fee over 30 years can result in your portfolio having half the total value!
If you're just getting started investing and learning how fees impact your portfolio, I'd encourage you to read through my free investment course (specifically '2.2 - All About Fees') where I go over all the different types of fees you can be charged and how to lower them.
For these two funds, RCRYX has an expense ratio of 0.85% while SCHZ has an expense ratio of 0.04%.
Winner: $SCHZ
Fund Size Comparison
One place these two funds differ is in their total assets under management. This is a good indication of how many other investors trust this fund. A large fund by itself doesn't mean it's a good fund, but it is one thing to consider when figuring out how to choose the right fund.
In the case of these two funds, RCRYX is a small fund with 117 Million in assets under management. SCHZ, on the other hand, is a large fund with 7.7 Billion in assets under management.
Winner: $SCHZ, Schwab U.S. Aggregate Bond ETF
Which Should You Choose? RCRYX or SCHZ?
Since both of these funds are Bond Total US Bond Market funds, you'll most likely only need to invest in one of these funds – not both. Running both of these funds through Minafi's FI Score algorithm, gives RCRYX a score of 32 and SCHZ a score of 93.
In this case, one fund has a 90+ score – which the clear winner between these two.
Winner: $SCHZ, Schwab U.S. Aggregate Bond ETF