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.
|Name||Schwab U.S. Dividend Equity ETF||Communication Services Select Sector SPDR Fund|
|Issuer||Schwab ETFs||SPDR State Street Global Advisors|
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%).
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%).
|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%.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|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%.
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.
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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