SCHD vs VTI: Which Is The Best ETF?

We Compare SCHD vs VTI:

We are going to explore the difference between Schwab U.S. Dividend Equity ETF (SCHD) vs Vanguard Total Stock Market ETF (VTI)

Choosing between two funds can be difficult, but I will make it easy for you to decide between SCHD vs VTI.

 

SCHD vs VTI

The primary difference between SCHD and VTI is the company that offers the exchange-traded fund (ETF).  SCHD is offered by Charles Schwab, while Vanguard offers VTI.

Another significant difference is the number of stocks in each, with VTI having 3,535 different companies in the index compared to 103 with SCHD.

SCHD is offered by Charles Schwab

Vanguard offers VTI

VTI has a lower expense ratio of 0.03% compared to 0.06% with SCHD.  That makes SCHD twice as expensive as VTI.

SCHD

• Fund Inception: 2011
• Offered By Charles Schwab
• Tracks Dow Jones U.S Dividend 100 Index
• Expense Ratio 0.06%
• Number Of Stocks: 103
• High Yield Dividend ETF

VTI

• Fund Inception: 2000
• Tracks the CRSP US Total Market Index
• Expense Ratio: 0.03%
• Vanguard ETF
• Number Of Stocks: 3,535
• Admiral Shares (VTSAX)

 

SCHD vs VTI Performance

SCHD and VTI have performed almost the same over the last 10 years, with VTI barely beating SCHD by 0.05% annually.

Here is how their performance compares:

Here is another comparison of short-term performance:

As you can see, they have performed almost the same over the long term, and SCHD has outperformed over the short term.

 

SCHD vs VTI Holdings

There is a significant difference in the number of holdings for SCHD and VTI.  SCHD includes 103 stocks in the ETF, while VTI holds 3,535 stocks.

VTI holds 34 times more companies compared to SCHD.

These funds also differ in their sector diversification.  SCHD is 19% technology, while VTI is 29%.  VTI is weighted more toward the tech sector, while SCHD leans more toward the financial sector.

This may give the appearance that SCHD is more diversified.  However, with only 103 holdings, SCHD’s top 10 comprise 40% of its assets.

Here are SCHD and VTI holdings side-by-side:

The top 10 holdings for SCHD make up 40% of its portfolio, while VTI’s top 10 holdings make up 24%.

This means the performance of a few stocks like Coca-Cola, Merck, Amgen, Verizon, and Pfizer will significantly impact the overall performance of SCHD.

 

SCHD vs VTI Overlap

There is an overlap between SCHD and VTI that includes 98 stocks.  Almost all of the holdings in SCHD are included in VTI.  However, only 2.7% of VTI’s holdings are included in SCHD.

Here are SCHD and VTI holdings overlap:

This means VTI includes all the holdings in SCHD and many more.

This gives VTI more diversification compared to SCHD.

 

VTI and SCHD Differences

VTI vs SCHD differs in that VTI holds 34 times as many stocks.  SCHD holds roughly 103 stocks making it smaller compared to most other ETFs.

Investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.

Differences between VTI and SCHD:

• Different Number Of Holdings (3,535 vs 103)
• Level Of Diversification
• Tracking Index
• Brokerage (VTI is Vanguard, SCHD is Schwab)

 

SCHD Description

The Schwab U.S. Dividend Equity ETF (SCHD) was launched in October 2011 as a fund that seeks to track the total return of the Dow Jones U.S.  This means that the fund tracks the performance of the Dow Jones U.S. Dividend 100 Index to replicate its total returns.

The SCHD exchange-traded fund is passively managed and designed to give investors broad exposure to the Large Cap Value segment of the U.S. equity market.

It has amassed over $29 billion in assets, making it one of the largest ETFs attempting to match the Large Cap Value portion of the U.S. equity market.

Large-cap companies are more stable than mid and small-cap companies.  This means less risk for investors.

It can also be a more reliable source of cash flow as these companies usually have a market capitalization of $10 billion and above.

 

SCHD Performance

SCHD closely monitors and seeks to replicate the performance of its underlying index, the Dow Jones U.S. Dividend 100 Index.  The Dow Jones U.S. Dividend 100 Index is one of the top funds in the United States.

The Index measures the performance of high dividend-yielding stocks issued by U.S. companies.

These are stocks that have, over the years, shown consistency in paying dividends which is their primary advantage over other companies.

As you can see, SCHD has performed well since its inception in 2011.

The ETF has a beta of 0.96 and a standard deviation of 22.79% for the trailing three-year period.  This makes SCHD a medium-risk choice in its class.

The fund has roughly 103 holdings.

For investors looking for a fund to expose them to the Large Cap Value segment of the market, Schwab U.S. Dividend Equity ETF may be a good option based on selected vital benefits.

These include expense ratio, expected asset class return, and momentum.

 

SCHD Costs

Cost is a vital factor to consider when choosing an ETF, especially for a long-term investment strategy.  To analyze the cost of an ETF, you should look at the expense ratio.

Cheaper funds tend to yield higher profits since they spend less on management.

SCHD is one of the cheapest exchange-traded funds, with an expense ratio of 0.06%.

In other words, for a $10,000 investment, the ETF charges you $6 for annual operating expenses.

 

SCHD Holdings

The top 10 holdings for SCHD make up 40% of its total assets.

Schwab’s SCHD comprises Amgen, Coca-Cola, Merck, and Verizon and provides exposure to over 100 stocks.

With only 103 holdings in the portfolio, SCHD is not very diversified compared to other Schwab ETFs like Schwab Total Stock Market Index Fund (SWTSX).

 

VTI Description

• Fund Inception: 2000
• Tracks the CRSP US Total Market Index
• Expense Ratio: 0.03%
• Vanguard ETF
• No Minimum Investment
• Number Of Stocks: 3,535
• Admiral Shares (VTSAX)

Vanguard Total Stock Market ETF (VTI) represents close to 100% of the U.S. equity market that is publicly traded.  It also tracks the CRSP U.S. Total Market Index.

Vanguard’s VTI has an expense ratio of 0.03%.

This notably implies that the fund has limited exposure to several international stocks.

However, this does not affect the companies represented in the fund.  These stocks have a significant international presence.

 

VTI Performance

Vanguard Total Stock Market ETF (VTI) is popular for many reasons, of which consistent returns are a major part.

Its risk level is similar to that of the S&P 500.

 

VTI Holdings

Vanguard’s VTI comprises Apple, Microsoft, Google, Amazon, and Tesla but also provides exposure to over 3,500 stocks.

Here are the top 10 holdings for VTI:

Major sectors in the index include:

• Technology
• Healthcare
• Consumer Services
• Financials
• Industrials

The top 10 holdings make up 25% of its total net assets.

 

No Minimum Investment

SCHD and VTI are exchange-traded funds (ETFs), so there is no minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance.

Normally, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  This is great for shares of VTI due to its high prices per share (~$225/share).

There are two easy ways to invest in VTI or SCHD commission-free.

1. Vanguard to invest in VTI or Charles Schwab for SCHD
2. M1 Finance to invest in either VTI or SCHD. (Get $100 When You Use This Link To Create An Invest Account and Deposit $5,000 Within 30 Days)

Both of these options are free.  This is important because fees can lower our returns.

M1 Finance is the best option because it lets you purchase VTI, SCHD, and thousands of other stocks.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital’s free tools allow you to quickly find which of your investments has high fees so you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

Which Is Better SCHD or VTI?

SCHD and VTI are different investments.  VTI offers more diversification since it holds about 34 times as many stocks.

This diversification hasn’t made a difference in terms of its performance.  However, you can expect less volatility in general with higher diversified funds.

Its slightly higher expense ratio offsets some of the higher returns provided by SCHD.

VTI offers stable returns with more diversification and at a lower cost.

SCHD offers higher dividend income with more risk/volatility and a slightly higher cost.

If having a larger basket of stocks helps you sleep at night, VTI would be a better option.

If you seek the highest possible returns and can handle the increased volatility, then SCHD might be a better option.

Lastly, it’s important to consider costs and fees because they can cost you in the long run.  That’s why purchasing and selling your shares commission-free is essential.

Again a great way to do this is with M1 Finance.

You can purchase fractional shares for free, allowing you to buy VTI, SCHD, and thousands of other stocks/ETFs.

 

Is VTI or SCHD Better for Financial Independence?

VTI and SCHD have performed well enough to get you to Financial Independence Retire Early (FIRE).  They have performed well over the last 10 years and have low expense ratios.

Being part of the FIRE community, we aim for the lowest fees possible and are big fans of Vanguard.

For those reasons, I prefer VTI over SCHD.

Related Posts:

• VTI vs VOO
• SCHD vs SPHD
• SCHD vs DGRO
• VTSAX vs VTI
• SCHD vs VIG
• SCHB vs VTI
• QQQ vs SCHD

 

My Winner: VTI

My winner is VTI based on the lower expense ratio and the fact that I love Vanguard.

Vanguard’s VTI offers:

• Diversification
• Lower Fees
• Vanguard Fund

Lower fees are a guaranteed way to keep more money in your portfolio!

I would also suggest considering VTI’s Admiral fund VTSAX.