The Schwab U.S. Dividend Equity ETF (SCHD) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between SCHD and XLC? And which fund is better?
The expense ratio of SCHD is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare SCHD vs. XLC. We’ll look at risk metrics and holdings, as well as at their performance and industry exposure. Moreover, I’ll also discuss SCHD’s and XLC’s portfolio growth, annual returns, and fund composition and examine how these affect their overall returns.
Summary
| SCHD | XLC | |
| Name | Schwab U.S. Dividend Equity ETF | Communication Services Select Sector SPDR Fund |
| Category | Large Value | Communications |
| Issuer | Schwab ETFs | SPDR State Street Global Advisors |
| AUM | 26B | 14.09B |
| Avg. Return | 14.80% | 29.04% |
| Div. Yield | 2.89% | 0.62% |
| Expense Ratio | 0.06% | 0.12% |
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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
SCHD’s dividend yield is 2.27% higher than that of XLC (2.89% vs. 0.62%). Also, SCHD yielded on average 14.23% less per year over the past decade (14.80% vs. 29.04%). The expense ratio of SCHD is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%).
Fund Composition
Industry Exposure
| SCHD | XLC | |
| Technology | 16.26% | 0.0% |
| Industrials | 18.05% | 0.0% |
| Energy | 1.87% | 0.0% |
| Communication Services | 4.96% | 100.0% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 12.64% | 0.0% |
| Consumer Defensive | 14.04% | 0.0% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 21.69% | 0.0% |
| Consumer Cyclical | 8.36% | 0.0% |
| Basic Materials | 2.13% | 0.0% |
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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
SCHD is 21.69% more exposed to the Financial Services sector than XLC (21.69% vs 0.0%). SCHD’s exposure to Industrials and Technology stocks is 18.05% higher and 16.26% higher respectively (18.05% vs. 0.0% and 16.26% vs. 0.0%). In total, Utilities, Energy, and Basic Materials also make up 4.00% more of the fund’s holdings compared to XLC (4.00% vs. 0.00%).
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%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| SCHD | XLC | |
| Mean Return | 0 | 0 |
| R-squared | 0 | 0 |
| Std. Deviation | 0 | 0 |
| Alpha | 0 | 0 |
| Beta | 0 | 0 |
| Sharpe Ratio | 0 | 0 |
| Treynor Ratio | 0 | 0 |
The Schwab U.S. Dividend Equity ETF (SCHD) has a Beta of 0 with a R-squared of 0 and a Sharpe Ratio of 0. Its Treynor Ratio is 0 while SCHD’s Alpha is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its Beta is 0 while XLC’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Alpha of 0.
SCHD’s Mean Return is 0.00 points lower than that of XLC and its R-squared is 0.00 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than XLC. The Alpha and Beta of SCHD are 0.00 points lower and 0.00 points lower than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHD | XLC |
| 2020 | 15.11% | 26.85% |
| 2019 | 27.28% | 31.22% |
| 2018 | -5.46% | 0.0% |
| 2017 | 20.88% | 0.0% |
| 2016 | 16.25% | 0.0% |
| 2015 | -0.21% | 0.0% |
| 2014 | 11.66% | 0.0% |
| 2013 | 32.9% | 0.0% |
| 2012 | 11.4% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
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 XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SCHD | $10,000 | $14,651 | 14.80% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in SCHD would have resulted in a final balance of $14,651. This is a profit of $4,651 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.80%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
SCHD’s CAGR is 14.23 percentage points lower than that of XLC and as a result, would have yielded $1,994 less on a $10,000 investment. Thus, SCHD performed worse than XLC by 14.23% annually.
Current recommendations:
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
