If you’re looking for a way to invest in the stock market, exchange-traded funds (ETFs) are a great option.
They offer investors the opportunity to diversify their portfolio by investing in a basket of stocks. Two popular ETFs are SCHD and VT.
SCHD vs VT: SCHD is an ETF that focuses on high-quality dividend-paying stocks. It tracks the Dow Jones U.S. Dividend 100 Index, which consists of 100 U.S. stocks with a history of consistently paying dividends.
The ETF aims to provide investors with a high level of current income and long-term capital appreciation.
SCHD vs VT: On the other hand, VT is an ETF that provides investors with exposure to the entire global stock market. It tracks the FTSE Global All Cap Index, which includes stocks from both developed and emerging markets.
The ETF aims to provide investors with broad diversification across different countries and sectors.
Both SCHD and VT have their advantages and disadvantages. SCHD may be a good choice for investors who are looking for stable income from their investments.
It has a higher exposure to the financial services sector and a lower standard deviation.
Meanwhile, VT may be a good choice for investors who are looking for broad diversification across different countries and sectors.
It has a lower expense ratio and provides exposure to both developed and emerging markets.
Table of Contents
Overview of SCHD vs VT
SCHD vs VT Performance Comparison
When it comes to performance, SCHD has provided higher returns than VT over the past 8 years.
According to Mr. Marvin Allen, SCHD has a higher exposure to the financial services sector, which has contributed to its outperformance.
Additionally, the expense ratio of SCHD is lower than VT’s, which means investors in SCHD pay less in fees.
On the other hand, VT is a more diversified fund that provides exposure to both domestic and international markets.
SCHD vs VT Risk Analysis
When it comes to risk, SCHD has a lower standard deviation than VT, which means it has experienced less volatility in the past.
However, it’s important to note that SCHD is less diversified than VT, which means it’s subject to additional uncompensated risk.
According to a post on Reddit by a user named “jamescrawford,” a fund like SCHD will perform largely like a total market fund with a value tilt, but it’s notably less diversified.
Meanwhile, VT is a more diversified fund that provides exposure to both domestic and international markets, which may help reduce risk through diversification.
SCHD and VT have different strengths and weaknesses when it comes to performance and risk.
SCHD has provided higher returns than VT over the past 8 years and has a lower standard deviation, but it’s less diversified and subject to additional uncompensated risk.
Meanwhile, VT is a more diversified fund that provides exposure to both domestic and international markets, but it has a higher expense ratio and has underperformed SCHD in the past.
SCHD vs VT: Very Similar
When comparing the performance of Vanguard Total Stock Market ETF (VT) and Schwab US Dividend Equity ETF (SCHD), it’s important to note that both funds have provided solid returns over the years.
However, VT has outperformed SCHD in terms of total return since inception.
According to Morningstar, as of April 15th 2023, VT has returned 11.53% annually since inception, while SCHD has returned 10.19% annually since its inception.
It’s also important to note that VT has a higher expense ratio than SCHD.
According to Schwab, SCHD has an expense ratio of 0.06%, while VT has an expense ratio of 0.03%. This means that SCHD may be a more cost-effective option for investors who are looking to minimize their expenses.
SCHD vs VT Analysis
When it comes to risk analysis, both funds have relatively low volatility compared to the overall market. However, SCHD has a lower standard deviation than VT.
According to Morningstar, as of April 15th 2023, VT has a standard deviation of 16.37%, while SCHD has a standard deviation of 14.14%.
This means that SCHD may be a more stable option for investors who are looking to minimize their risk. It’s also important to note that both funds have different sector diversification.
SCHD has a higher exposure to the financial services sector, while VT is more heavily weighted towards the technology sector.
According to Schwab, as of March 31st 2023, SCHD’s top three sectors were financials (23.6%), consumer staples (19.2%), and healthcare (13.5%).
On the other hand, according to Vanguard, as of March 31st 2023, VT’s top three sectors were information technology (27.7%), healthcare (14.3%), and financials (13.1%).
Both VT and SCHD have their unique strengths and weaknesses.
Investors should carefully consider their investment goals and risk tolerance before choosing between these two funds.
Factors to Consider When Choosing Between SCHD vs VT
Investment Goals and Objectives
When choosing between SCHD and VT, it is important to consider your investment goals and objectives.
SCHD is a dividend-focused ETF that seeks to provide investors with exposure to high-quality, large-cap U.S. stocks that have a history of paying dividends.
On the other hand, VT is a total stock market ETF that seeks to provide investors with exposure to the entire U.S. stock market, including small, mid, and large-cap stocks.
If you are looking for a steady stream of income from your investments and have a preference for large-cap stocks, SCHD may be the better option for you.
However, if you are looking for broad exposure to the U.S. stock market and are comfortable with the potential volatility of small and mid-cap stocks, VT may be the better choice.
Investment Time Horizon
Another important factor to consider when choosing between SCHD and VT is your investment time horizon.
If you have a long-term investment horizon and are willing to ride out market fluctuations, VT may be the better option.
This is because VT provides exposure to the entire U.S. stock market, which historically has provided strong long-term returns.
On the other hand, if you have a shorter investment time horizon and are looking for a more stable investment option, SCHD may be the better choice.
This is because SCHD focuses on high-quality, large-cap U.S. stocks that have a history of paying dividends, which can provide a more stable source of income.
Investment Style
Finally, it is important to consider your investment style when choosing between SCHD and VT. If you prefer a more passive investment approach, VT may be the better option.
This is because VT seeks to track the performance of the entire U.S. stock market and does not require active management.
However, if you prefer a more active investment approach and are willing to do your own research and analysis, SCHD may be the better choice.
This is because SCHD focuses on high-quality, large-cap U.S. stocks that have a history of paying dividends, which can provide opportunities for active investors to identify undervalued stocks.
Verdict: SCHD vs VT
After analyzing the differences between SCHD and VT, it is clear that both ETFs have their strengths and weaknesses.
SCHD has a lower expense ratio and higher exposure to the financial services sector, while VT has a more diverse portfolio with a larger number of holdings.
Investors who are looking for a more targeted approach with a focus on large-value stocks may prefer SCHD, while those who want a more diversified portfolio may prefer VT.
It ultimately depends on the individual’s investment goals and risk tolerance.
It’s also important to note that past performance is not indicative of future results. While SCHD has provided higher returns over the past 8 years, this may not necessarily continue in the future.
Investors should always do their own research and consult with a financial advisor before making any investment decisions.
In conclusion, both SCHD and VT are excellent ETFs that can provide investors with exposure to the U.S. stock market.
As with any investment, it’s important to do your due diligence and make an informed decision based on your own personal financial situation and goals.
