SCHB vs. SDY: What’s The Difference?

The Schwab U.S. Broad Market ETF (SCHB) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between SCHB and SDY? And which fund is better?

The expense ratio of SCHB is 0.32 percentage points lower than SDY’s (0.03% vs. 0.35%). SCHB also has a higher exposure to the technology sector and a higher standard deviation. Overall, SCHB has provided higher returns than SDY over the past 10 years.

In this article, we’ll compare SCHB vs. SDY. We’ll look at risk metrics and performance, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss SCHB’s and SDY’s fund composition, industry exposure, and holdings and examine how these affect their overall returns.

Summary

SCHB SDY
Name Schwab U.S. Broad Market ETF SPDR S&P Dividend ETF
Category Large Blend Large Value
Issuer Schwab ETFs SPDR State Street Global Advisors
AUM 21.44B 19.67B
Avg. Return 14.43% 12.44%
Div. Yield 1.39% 2.65%
Expense Ratio 0.03% 0.35%

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

The SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

SCHB’s dividend yield is 1.26% lower than that of SDY (1.39% vs. 2.65%). Also, SCHB yielded on average 1.99% more per year over the past decade (14.43% vs. 12.44%). The expense ratio of SCHB is 0.32 percentage points lower than SDY’s (0.03% vs. 0.35%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

SCHB vs. SDY - Industry Exposure

SCHB SDY
Technology 24.15% 2.0%
Industrials 9.29% 15.89%
Energy 2.78% 5.95%
Communication Services 10.52% 4.64%
Utilities 2.32% 12.14%
Healthcare 13.37% 7.35%
Consumer Defensive 5.76% 14.01%
Real Estate 3.58% 6.57%
Financial Services 13.88% 16.32%
Consumer Cyclical 11.9% 8.68%
Basic Materials 2.45% 6.45%

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

The SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

SCHB is 22.15% more exposed to the Technology sector than SDY (24.15% vs 2.0%). SCHB’s exposure to Financial Services and Healthcare stocks is 2.44% lower and 6.02% higher respectively (13.88% vs. 16.32% and 13.37% vs. 7.35%). In total, Basic Materials, Energy, and Real Estate also make up 10.16% less of the fund’s holdings compared to SDY (8.81% vs. 18.97%).

Holdings

SCHB - Holdings

SCHB Holdings Weight
Apple Inc 4.86%
Microsoft Corp 4.61%
Amazon.com Inc 3.33%
Facebook Inc A 1.88%
Alphabet Inc A 1.66%
Alphabet Inc Class C 1.61%
Berkshire Hathaway Inc Class B 1.19%
Tesla Inc 1.18%
NVIDIA Corp 1.13%
JPMorgan Chase & Co 1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

SCHB SDY
Mean Return 1.23 1.07
R-squared 99.33 83.62
Std. Deviation 14.12 12.9
Alpha -0.58 -0.1
Beta 1.04 0.87
Sharpe Ratio 1 0.95
Treynor Ratio 13.58 13.94

The Schwab U.S. Broad Market ETF (SCHB) has a Mean Return of 1.23 with a Beta of 1.04 and a Sharpe Ratio of 1. Its Treynor Ratio is 13.58 while SCHB’s Standard Deviation is 14.12. Furthermore, the fund has a R-squared of 99.33 and a Alpha of -0.58.

The SPDR S&P Dividend ETF (SDY) has a Treynor Ratio of 13.94 with a Beta of 0.87 and a R-squared of 83.62. Its Standard Deviation is 12.9 while SDY’s Alpha is -0.1. Furthermore, the fund has a Mean Return of 1.07 and a Sharpe Ratio of 0.95.

SCHB’s Mean Return is 0.16 points higher than that of SDY and its R-squared is 15.71 points higher. With a Standard Deviation of 14.12, SCHB is slightly more volatile than SDY. The Alpha and Beta of SCHB are 0.48 points lower and 0.17 points higher than SDY’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

SCHB vs. SDY - Annual Returns

Year SCHB SDY
2020 20.77% 1.78%
2019 30.94% 23.37%
2018 -5.25% -2.73%
2017 21.18% 15.84%
2016 12.56% 20.17%
2015 0.45% -0.7%
2014 12.67% 13.8%
2013 33.37% 30.09%
2012 16.22% 11.51%
2011 1.4% 7.28%
2010 17.1% 16.41%

SCHB had its best year in 2013 with an annual return of 33.37%. SCHB’s worst year over the past decade yielded -5.25% and occurred in 2018. In most years the Schwab U.S. Broad Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.67%, 16.22%, and 17.1% respectively.

The year 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

SCHB vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
SDY $10,000 $29,900 12.44%

A $10,000 investment in SCHB would have resulted in a final balance of $36,354. This is a profit of $26,354 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.43%.

With a $10,000 investment in SDY, the end total would have been $29,900. This equates to a $19,900 profit over 10 years and a compound annual growth rate (CAGR) of 12.44%.

SCHB’s CAGR is 1.99 percentage points higher than that of SDY and as a result, would have yielded $6,454 more on a $10,000 investment. Thus, SCHB outperformed SDY by 1.99% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply