The Schwab U.S. Dividend Equity ETF (SCHD) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and VLUE is a iShares Large Value fund. So, what’s the difference between SCHD and VLUE? And which fund is better?
The expense ratio of SCHD is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than VLUE over the past 7 years.
In this article, we’ll compare SCHD vs. VLUE. We’ll look at holdings and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss SCHD’s and VLUE’s performance, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Schwab U.S. Dividend Equity ETF||iShares MSCI USA Value Factor ETF|
|Category||Large Value||Large Value|
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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
SCHD’s dividend yield is 1.00% higher than that of VLUE (2.89% vs. 1.89%). Also, SCHD yielded on average 5.89% more per year over the past decade (14.80% vs. 8.91%). The expense ratio of SCHD is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%).
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).
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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
SCHD is 10.73% more exposed to the Financial Services sector than VLUE (21.69% vs 10.96%). SCHD’s exposure to Industrials and Technology stocks is 8.91% higher and 10.63% lower respectively (18.05% vs. 9.14% and 16.26% vs. 26.89%). In total, Utilities, Energy, and Basic Materials also make up 3.24% less of the fund’s holdings compared to VLUE (4.00% vs. 7.24%).
|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%.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
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).
The Schwab U.S. Dividend Equity ETF (SCHD) has a Treynor Ratio of 0 with a Alpha of 0 and a Beta of 0. Its R-squared is 0 while SCHD’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.
The iShares MSCI USA Value Factor ETF (VLUE) has a Beta of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Mean Return is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Sharpe Ratio of 0.
SCHD’s Mean Return is 0.00 points lower than that of VLUE and its R-squared is 0.00 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than VLUE. The Alpha and Beta of SCHD are 0.00 points lower and 0.00 points lower than VLUE’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).
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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SCHD would have resulted in a final balance of $21,688. This is a profit of $11,688 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.80%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
SCHD’s CAGR is 5.89 percentage points higher than that of VLUE and as a result, would have yielded $4,441 more on a $10,000 investment. Thus, SCHD outperformed VLUE by 5.89% annually.
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.