SCHD vs. SCHB: What’s The Difference?

The Schwab U.S. Dividend Equity ETF (SCHD) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between SCHD and SCHB? And which fund is better?

The expense ratio of SCHD is 0.03 percentage points higher than SCHB’s (0.06% vs. 0.03%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than SCHB over the past 8 years.

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

Summary

SCHD SCHB
Name Schwab U.S. Dividend Equity ETF Schwab U.S. Broad Market ETF
Category Large Value Large Blend
Issuer Schwab ETFs Schwab ETFs
AUM 26B 21.44B
Avg. Return 14.80% 14.43%
Div. Yield 2.89% 1.39%
Expense Ratio 0.06% 0.03%

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 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%.

SCHD’s dividend yield is 1.50% higher than that of SCHB (2.89% vs. 1.39%). Also, SCHD yielded on average 0.37% more per year over the past decade (14.80% vs. 14.43%). The expense ratio of SCHD is 0.03 percentage points higher than SCHB’s (0.06% vs. 0.03%).

Fund Composition

Industry Exposure

SCHD vs. SCHB - Industry Exposure

SCHD SCHB
Technology 16.26% 24.15%
Industrials 18.05% 9.29%
Energy 1.87% 2.78%
Communication Services 4.96% 10.52%
Utilities 0.0% 2.32%
Healthcare 12.64% 13.37%
Consumer Defensive 14.04% 5.76%
Real Estate 0.0% 3.58%
Financial Services 21.69% 13.88%
Consumer Cyclical 8.36% 11.9%
Basic Materials 2.13% 2.45%

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 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%.

SCHD is 7.81% more exposed to the Financial Services sector than SCHB (21.69% vs 13.88%). SCHD’s exposure to Industrials and Technology stocks is 8.76% higher and 7.89% lower respectively (18.05% vs. 9.29% and 16.26% vs. 24.15%). In total, Utilities, Energy, and Basic Materials also make up 3.55% less of the fund’s holdings compared to SCHB (4.00% vs. 7.55%).

Holdings

SCHD - 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%.

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%.

Risk Analysis

SCHD SCHB
Mean Return 0 1.23
R-squared 0 99.33
Std. Deviation 0 14.12
Alpha 0 -0.58
Beta 0 1.04
Sharpe Ratio 0 1
Treynor Ratio 0 13.58

The Schwab U.S. Dividend Equity ETF (SCHD) has a Alpha of 0 with a Mean Return of 0 and a Beta of 0. Its Sharpe Ratio is 0 while SCHD’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.

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

SCHD’s Mean Return is 1.23 points lower than that of SCHB and its R-squared is 99.33 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than SCHB. The Alpha and Beta of SCHD are 0.58 points higher and 1.04 points lower than SCHB’s Alpha and Beta.

Performance

Annual Returns

SCHD vs. SCHB - Annual Returns

Year SCHD SCHB
2020 15.11% 20.77%
2019 27.28% 30.94%
2018 -5.46% -5.25%
2017 20.88% 21.18%
2016 16.25% 12.56%
2015 -0.21% 0.45%
2014 11.66% 12.67%
2013 32.9% 33.37%
2012 11.4% 16.22%
2011 0.0% 1.4%
2010 0.0% 17.1%

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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% respectively.

Portfolio Growth

SCHD vs. SCHB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHD $10,000 $28,823 14.80%
SCHB $10,000 $30,849 14.43%

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 SCHB, the end total would have been $30,849. This equates to a $20,849 profit over 8 years and a compound annual growth rate (CAGR) of 14.43%.

SCHD’s CAGR is 0.37 percentage points higher than that of SCHB and as a result, would have yielded $2,026 less on a $10,000 investment. Thus, SCHD outperformed SCHB by 0.37% annually.


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