SCHP vs. SDY: What’s The Difference?

The Schwab U.S. TIPS ETF (SCHP) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between SCHP and SDY? And which fund is better?

The expense ratio of SCHP is 0.30 percentage points lower than SDY’s (0.05% vs. 0.35%). SCHP is mostly comprised of AAA bonds while SDY has a high exposure to the financial services sector. Overall, SCHP has provided lower returns than SDY over the past 10 years.

In this article, we’ll compare SCHP vs. SDY. We’ll look at portfolio growth and fund composition, as well as at their annual returns and performance. Moreover, I’ll also discuss SCHP’s and SDY’s risk metrics, industry exposure, and holdings and examine how these affect their overall returns.

Summary

SCHP SDY
Name Schwab U.S. TIPS ETF SPDR S&P Dividend ETF
Category Inflation-Protected Bond Large Value
Issuer Schwab ETFs SPDR State Street Global Advisors
AUM 18.41B 19.67B
Avg. Return 3.92% 12.44%
Div. Yield 1.97% 2.65%
Expense Ratio 0.05% 0.35%

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%.

The SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

SCHP’s dividend yield is 0.68% lower than that of SDY (1.97% vs. 2.65%). Also, SCHP yielded on average 8.52% less per year over the past decade (3.92% vs. 12.44%). The expense ratio of SCHP is 0.30 percentage points lower than SDY’s (0.05% vs. 0.35%).

Fund Composition

Holdings

SCHP - Holdings

SCHP Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

Risk Analysis

SCHP SDY
Mean Return 0.28 1.07
R-squared 66.16 83.62
Std. Deviation 4.32 12.9
Alpha -0.5 -0.1
Beta 1.17 0.87
Sharpe Ratio 0.64 0.95
Treynor Ratio 2.31 13.94

The Schwab U.S. TIPS ETF (SCHP) has a Treynor Ratio of 2.31 with a Mean Return of 0.28 and a Sharpe Ratio of 0.64. Its Beta is 1.17 while SCHP’s Alpha is -0.5. Furthermore, the fund has a Standard Deviation of 4.32 and a R-squared of 66.16.

The SPDR S&P Dividend ETF (SDY) has a Standard Deviation of 12.9 with a Beta of 0.87 and a Alpha of -0.1. Its Treynor Ratio is 13.94 while SDY’s Sharpe Ratio is 0.95. Furthermore, the fund has a R-squared of 83.62 and a Mean Return of 1.07.

SCHP’s Mean Return is 0.79 points lower than that of SDY and its R-squared is 17.46 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than SDY. The Alpha and Beta of SCHP are 0.40 points lower and 0.30 points higher than SDY’s Alpha and Beta.

Performance

Annual Returns

SCHP vs. SDY - Annual Returns

Year SCHP SDY
2020 10.94% 1.78%
2019 8.36% 23.37%
2018 -1.31% -2.73%
2017 2.95% 15.84%
2016 4.6% 20.17%
2015 -1.5% -0.7%
2014 3.56% 13.8%
2013 -8.66% 30.09%
2012 6.83% 11.51%
2011 13.38% 7.28%
2010 0.0% 16.41%

SCHP had its best year in 2011 with an annual return of 13.38%. SCHP’s worst year over the past decade yielded -8.66% and occurred in 2013. In most years the Schwab U.S. TIPS ETF provided moderate returns such as in 2017, 2014, and 2016 where annual returns amounted to 2.95%, 3.56%, and 4.6% respectively.

The year 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

SCHP vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHP $10,000 $14,418 3.92%
SDY $10,000 $29,900 12.44%

A $10,000 investment in SCHP would have resulted in a final balance of $14,418. This is a profit of $4,418 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.92%.

With a $10,000 investment in SDY, the end total would have been $29,900. This equates to a $19,900 profit over 10 years and a compound annual growth rate (CAGR) of 12.44%.

SCHP’s CAGR is 8.52 percentage points lower than that of SDY and as a result, would have yielded $15,482 less on a $10,000 investment. Thus, SCHP performed worse than SDY by 8.52% 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) 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 Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply