The Schwab U.S. Dividend Equity ETF (SCHD) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between SCHD and MDY? And which fund is better?
The expense ratio of SCHD is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than MDY over the past 8 years.
In this article, we’ll compare SCHD vs. MDY. We’ll look at industry exposure and risk metrics, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss SCHD’s and MDY’s holdings, fund composition, and performance and examine how these affect their overall returns.
Summary
| SCHD | MDY | |
| Name | Schwab U.S. Dividend Equity ETF | SPDR S&P MIDCAP 400 ETF Trust |
| Category | Large Value | Mid-Cap Blend |
| Issuer | Schwab ETFs | SPDR State Street Global Advisors |
| AUM | 26B | 21.31B |
| Avg. Return | 14.80% | 13.29% |
| Div. Yield | 2.89% | 0.94% |
| Expense Ratio | 0.06% | 0.23% |
The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.
SCHD’s dividend yield is 1.95% higher than that of MDY (2.89% vs. 0.94%). Also, SCHD yielded on average 1.51% more per year over the past decade (14.80% vs. 13.29%). The expense ratio of SCHD is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%).
Fund Composition
Industry Exposure
| SCHD | MDY | |
| Technology | 16.26% | 14.74% |
| Industrials | 18.05% | 17.88% |
| Energy | 1.87% | 2.52% |
| Communication Services | 4.96% | 1.63% |
| Utilities | 0.0% | 2.84% |
| Healthcare | 12.64% | 11.17% |
| Consumer Defensive | 14.04% | 4.2% |
| Real Estate | 0.0% | 9.66% |
| Financial Services | 21.69% | 15.2% |
| Consumer Cyclical | 8.36% | 14.89% |
| Basic Materials | 2.13% | 5.27% |
The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.
MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.
SCHD is 6.49% more exposed to the Financial Services sector than MDY (21.69% vs 15.2%). SCHD’s exposure to Industrials and Technology stocks is 0.17% higher and 1.52% higher respectively (18.05% vs. 17.88% and 16.26% vs. 14.74%). In total, Utilities, Energy, and Basic Materials also make up 6.63% less of the fund’s holdings compared to MDY (4.00% vs. 10.63%).
Holdings
| SCHD Holdings | Weight |
| Merck & Co Inc | 4.24% |
| The Home Depot Inc | 4.19% |
| Texas Instruments Inc | 4.16% |
| Broadcom Inc | 4.15% |
| Amgen Inc | 4.11% |
| PepsiCo Inc | 4.09% |
| BlackRock Inc | 4.05% |
| Pfizer Inc | 3.97% |
| Verizon Communications Inc | 3.96% |
| Cisco Systems Inc | 3.96% |
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
| MDY Holdings | Weight |
| Bio-Techne Corp | 0.75% |
| Molina Healthcare Inc | 0.63% |
| Cognex Corp | 0.63% |
| Fair Isaac Corp | 0.62% |
| XPO Logistics Inc | 0.61% |
| SolarEdge Technologies Inc | 0.61% |
| Signature Bank | 0.6% |
| Graco Inc | 0.55% |
| Camden Property Trust | 0.55% |
| FactSet Research Systems Inc | 0.54% |
MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.
SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.
Risk Analysis
| SCHD | MDY | |
| Mean Return | 0 | 1.08 |
| R-squared | 0 | 86.66 |
| Std. Deviation | 0 | 16.83 |
| Alpha | 0 | -4.1 |
| Beta | 0 | 1.15 |
| Sharpe Ratio | 0 | 0.73 |
| Treynor Ratio | 0 | 9.97 |
The Schwab U.S. Dividend Equity ETF (SCHD) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its Alpha is 0 while SCHD’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Standard Deviation of 16.83 with a R-squared of 86.66 and a Beta of 1.15. Its Sharpe Ratio is 0.73 while MDY’s Mean Return is 1.08. Furthermore, the fund has a Alpha of -4.1 and a Treynor Ratio of 9.97.
SCHD’s Mean Return is 1.08 points lower than that of MDY and its R-squared is 86.66 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than MDY. The Alpha and Beta of SCHD are 4.10 points higher and 1.15 points lower than MDY’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHD | MDY |
| 2020 | 15.11% | 13.51% |
| 2019 | 27.28% | 25.86% |
| 2018 | -5.46% | -11.28% |
| 2017 | 20.88% | 15.89% |
| 2016 | 16.25% | 20.33% |
| 2015 | -0.21% | -2.4% |
| 2014 | 11.66% | 9.42% |
| 2013 | 32.9% | 33.08% |
| 2012 | 11.4% | 17.58% |
| 2011 | 0.0% | -1.99% |
| 2010 | 0.0% | 26.17% |
SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% respectively.
The year 2013 was the strongest year for MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHD | $10,000 | $28,823 | 14.80% |
| MDY | $10,000 | $25,120 | 13.29% |
A $10,000 investment in SCHD would have resulted in a final balance of $28,823. This is a profit of $18,823 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.80%.
With a $10,000 investment in MDY, the end total would have been $25,120. This equates to a $15,120 profit over 8 years and a compound annual growth rate (CAGR) of 13.29%.
SCHD’s CAGR is 1.51 percentage points higher than that of MDY and as a result, would have yielded $3,703 more on a $10,000 investment. Thus, SCHD outperformed MDY by 1.51% annually.
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