SCHD vs VTV: The Ultimate Value ETF Comparison Guide

📊 The Battle of Two Value ETF Giants

Interest in value ETFs has been heating up among investors lately. SCHD and VTV in particular have been attracting many investors with their unique appeal. Today, we will thoroughly compare these two ETFs.

SCHD has long been a beloved ETF, but honestly, it has underperformed the market quite substantially over the past few years. However, the real reason to invest in SCHD is the safety it provides during terrible market conditions that we have not yet experienced. So do not lose hope.

🎯 Similarities: More Alike Than You Think

These two ETFs share more common ground than you might expect.

Market Exposure

• Both are US large cap value equity ETFs
• Exposed to major American corporations

Cost Efficiency

• VTV: Approximately 0.04% expense ratio
• SCHD: Approximately 0.06% expense ratio
• Much cheaper compared to mutual funds or actively managed funds

Management Style

• Both are passively managed (index tracking)
• No active stock picking, simply following the index

⚖️ Key Differences: Where They Diverge

📈 Index Tracking Differences

VTV (Vanguard Value ETF)

• Tracks the CRSP US Large Cap Value Index
• Purely focused on value stocks
• Selection based on value metrics regardless of dividend yield

SCHD (Schwab US Dividend Equity ETF)

• Tracks the Dow Jones US Dividend 100 Index
• US stocks with strong and consistent dividends
• Filtered by quality and yield criteria

📊 Portfolio Composition

Category	VTV	SCHD
Number of Holdings	Over 300	About 100
Diversification	Very High	Relatively Concentrated
Selection Criteria	Pure Value	Value + Dividend Quality

💰 Dividend Yield Comparison

If you prioritize dividends, pay close attention to this.

• SCHD: Approximately 3.8% dividend yield
• VTV: Approximately 2.1% dividend yield

SCHD provides nearly double the dividend yield. This is because SCHD filters for strong dividend payers.

🏢 Sector and Top Holdings Analysis

Sector Composition

VTV Major Sectors

• Financials (strong presence)
• Industrials
• Healthcare
• Technology exposure: Very Low ✅

SCHD Major Sectors

• Energy
• Consumer Staples
• Healthcare
• Technology exposure: Very Low ✅

The low technology exposure in both ETFs is crucial. When looking for a true value ETF, the whole point is to protect yourself from higher tech or AI-heavy ETFs.

Top 10 Holdings

VTV Top 10

• JP Morgan, Berkshire Hathaway, Exxon Mobil
• Walmart, Johnson & Johnson, AbbVie, Home Depot

SCHD Top 10

• AbbVie, Cisco, Merck
• PepsiCo, Amgen, Coca-Cola, Lockheed Martin

🔄 Overlap Analysis

The overlap between these two funds is modest.

• VTV holdings also in SCHD: 12%
• SCHD holdings by weight also in VTV: 36%

This means holding both ETFs can still provide meaningful diversification benefits.

📈 Performance Comparison: Short vs Long Term

Past 6 Months Performance

• VTV: Significant gains 📈
• SCHD: Slight decline or flat

In the short term, VTV shows dominant performance.

Past 10 Years Performance

Surprisingly, over the long term, both ETFs perform very similarly. Even considering the recent months where VTV has surged.

Why This Difference?

Short-term performance diverges based on market conditions.

• Interest rate environment
• Market sentiment
• Dividend stock preference shifts

This demonstrates the importance of long-term investing.

💡 Conclusion: Which ETF Is Right for You?

VTV May Be Right If You:

• Want broad exposure to US large cap value stocks
• Believe in value stock growth over dividend yield
• Prefer wider diversification

SCHD May Be Right If You:

• Prioritize income (dividend returns)
• Are approaching or in retirement
• Want higher current yield

Both are excellent value ETFs. The key is clearly defining your investment goals. In the next article, we will cover specific strategies for positioning these two ETFs in your portfolio.