The Schwab U.S. Dividend Equity ETF (SCHD) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between SCHD and SCHP? And which fund is better?
The expense ratio of SCHD is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%). SCHD also has a high exposure to the financial services sector while SCHP is mostly comprised of AAA bonds. Overall, SCHD has provided higher returns than SCHP over the past 8 years.
In this article, we’ll compare SCHD vs. SCHP. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and performance. Moreover, I’ll also discuss SCHD’s and SCHP’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
|Name||Schwab U.S. Dividend Equity ETF||Schwab U.S. TIPS ETF|
|Category||Large Value||Inflation-Protected Bond|
|Issuer||Schwab ETFs||Schwab ETFs|
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
SCHD’s dividend yield is 0.92% higher than that of SCHP (2.89% vs. 1.97%). Also, SCHD yielded on average 10.89% more per year over the past decade (14.80% vs. 3.92%). The expense ratio of SCHD is 0.01 percentage points higher than SCHP’s (0.06% vs. 0.05%).
|Merck & Co Inc||4.24%|
|The Home Depot Inc||4.19%|
|Texas Instruments Inc||4.16%|
|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%.
|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Sharpe Ratio of 0 with a Mean Return of 0 and a R-squared of 0. Its Standard Deviation is 0 while SCHD’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
The Schwab U.S. TIPS ETF (SCHP) has a R-squared of 66.16 with a Mean Return of 0.28 and a Sharpe Ratio of 0.64. Its Treynor Ratio is 2.31 while SCHP’s Alpha is -0.5. Furthermore, the fund has a Standard Deviation of 4.32 and a Beta of 1.17.
SCHD’s Mean Return is 0.28 points lower than that of SCHP and its R-squared is 66.16 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than SCHP. The Alpha and Beta of SCHD are 0.50 points higher and 1.17 points lower than SCHP’s Alpha and Beta.
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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 SCHP, the end total would have been $11,903. This equates to a $1,903 profit over 8 years and a compound annual growth rate (CAGR) of 3.92%.
SCHD’s CAGR is 10.89 percentage points higher than that of SCHP and as a result, would have yielded $16,920 more on a $10,000 investment. Thus, SCHD outperformed SCHP by 10.89% annually.
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