SCHD Just Changed Its Strategy
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- čas přidán 21. 03. 2024
- / dividendbull
On Monday March 18th, the Schwab US Dividend Equity ETF, ticker SCHD, went through the process of reconstituting itself. What this means is that the fund went through a process of rebalancing, adding, and removing some of its holdings. Because SCHD is an index fund, and isn't an actively managed fund that has its holdings updated constantly, the only time changes are made is when the index itself is updated, which is the Dow Jones U.S. Dividend 100 Index. The fund rebalances its holdings every quarter, but only makes changes to its holdings once a year. But with the funds recent reconstitution, it's brought some pretty noticeable changes, which honestly shifts the strategy of this ETF in my opinion.
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These are all scammers
No one is making "choices", it's an algorithm that determines the drops and adds; it's doing what it is supposed to do. You can argue it's better or worse for the changes, but there is not a group of people sitting around making these choices. SCHD is about 10% of my holdings, reinventing divs, I'm sticking with it for now.
I don't see how SCHD had changed its strategy as it is still tracking the same index.
I also don't see how it is underperforming as it has tracked VOO closely in total return since inception. Only in the past 12 months VOO has done better, but the entire market is overvalued. Any reversion to the mean will bring them back together.
Clickbait
Agreed. I don’t think he understands how SCHD works.
Exactly! I don't think some people understand how it works. He says that it's not actively managed, but doesn't seem to understand what that actually means. SCHD is passively managed which means you are buying a fund that uses an automated selection process based on predetermined criteria for selecting its component stocks. Every year stocks that no longer make the criteria are tossed out and new stocks that do are added back in to replace them. SCHD has shown that the selection criteria they use leads to good results long term. You are not buying a set it and forget it set of stocks. You are buying a selection process.
@@Rich_Man101 yep, some people are ticked off because AVGO got tossed out. Don't buy an ETF because you want a particular stock. Simply buy the stock individually.
@@Max-us5xlexactly
"Changed its strategy" or simply "rebalanced its composition" based on its own normal rules? [Two very different things.]
Is following the algorithm as intended really *changing strategy?* It sounds like doing exactly what it set out to do to me
Correct! The selection process is unchanged. No "strategy change"! It's doing what it's supposed to do.
The strategy DID NOT change. It is exactly the same criteria. This is an algorithm-ran ETF. No one changed anything.
Cool story bro
@@paragonknight3307 so please explain how they did.
...i own it and you are exatly correct THESE LIES JUST KEEP ON COMING
That's what I thought. It's a formula, isn't it? They are still following the formula.
@@nerenahd exactly. It is ridiculous to say otherwise 🤝
The S&P 500 finished down 20% in 2022. This means long term investors have a great starting point in 2023. Here are 4 very popular ETF’s: $VOO- S&P 500 fund $VTI- Total US stock market $QQQ- High growth, tech $SCHD- Growth + Dividends| I just tallied my dividends for the year;$167k Blessed and grateful, disciplined and focused.
My "boring" index funds just paid me over $6,000 in dividends last month. This is money that i can choose to spend without having to sell any of my shares. But for now i have it all set to reinvest to buy me even more index funds.
Anyone have recommendations for a reliable monthly investment? I hope to ultimately supplement my income from work with a monthly income from investments. I will still make long-term investments, but it would be wonderful to have a little additional money each month.
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I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?
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It's nice to see a rational overview of the SCHD reconstitution. Too many tubers are using clickbait headlines of "sell" and "dump". Others have been touting SCHD simply because others have over the last couple of years. They seem unaware of the recent change. They never look under the hood.
All of this ^^^
As opposed to the clickbait headline about "changing its strategy"?
All it did was reconstitute/rebalance based on its own rules, correct...? [Being passively, not actively managed...]
They didn't change the "rules" or "strategy." Right? 🤷♂
Or, am I missing something?
Some pretty terrible info here. They didn't change anything with the strategy of this fund, and no one is deciding what companies come and go. The fund operates on a specific list of criteria (a pretty stout set of rules for companies to be added). Metrics like coverage ratio, cash to debt, and dividend growth rate. Lastly all dividend based holdings will underperform in a higher rate environment as investors looking for yield have alternatives to dividend income. Once rates go down/ normalize dividend holdings will come back into favor.
I agree with you, he probably should have said these changes have resulted from the algorithm, not that the strategy changed.
Thank you for not using histrionics and hyperbole when you talk about the market.
Well done, thank you for your excellent presentation. I use your information the best I can. Thank you again.
Thanks for the update.
Sounds like I'm going to just do a split 50/50 of SCHD and DGRO now. I have these in my IRA so the income is tax exempt. Just rolling that right back into the ETF...
if you look at the value series of both your will notice that they are complementary, sometimes one goes down relative to the other then you can buy more of it to keep that 50/50 split. Plus the have a small overlap of stocks. IMO that could continue to work for the future as it has been working in the past
...own all 3
Should have kicked Pfizer and UPS instead of Broadcom and Merck
Lol was machtn deutscher hier xD
Schaust du dir das nur aus Interesse an, oder hast du Anteile von dem etf?
Weil ich bis jetzt bei keinem Broker sei es bei Broker (scalable) oder „richtige Bank“ (comdirect) gesehen habe das der angeboten wird
Fr
SCHD is not actively managed, no one person or people “kicked” anything. It’s rebalanced automatically using core core algorithms. AVGOs dividend yield dropped below 2.00% from the share price run up. SChD has a minimum yield requirement of 2%. Merck’s current cash flow to earnings doesn’t meet the requirement from SChD. This is why SCHD has been so successful over the last 10 years. The strategy never changes there is no emotions in it. If you like some of the stocks that SCHD removed just buy those individually.
AVGO has run up over the years, sell high buy low. I have no problem w/ UPS but F Pfizer.
If it kept AVGO with 1.5% yield and a 50 PE, the SCHD passively managed algorithm would not function as a large cap value ETF.
I have enough exposure to AVGO with growth and tech investments. I'd rather have the larger dividend so I can get more shares through Drip.
If you really want more growth, are you going to reduce your SCHD shares and go with something else?
What was first site u mentioned? Street?
Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.
I’m taking the hybrid approach, VOO, SCHD as my foundation, with growth like MA, UNH, HD. And slow growth like O and PEP. I have a 20 year time horizon. But the best part is I still enjoy my life while I do this. Travel, and buy ONLY things I love. It’s the best combo, plus I love the small victories with receiving dividends/dividend growth/share price appreciation.
VGT is an excellent portfolio addition, but relying solely on it for retirement may not be optimal. I retired at 62, grew my portfolio to $1.5 million in 10 years starting with 135,000 through the help of a fiduciary and dividends now supplement my retirement income. Invest wisely, build your nest egg, and don't sell the chicken that lays the egg!
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Have a great weekend everyone 😊❤
...way off topic bot.
Great video. I won't dump any, but i don't like the removal of avgo. Will start looking at some others.
Computer made the change same as it has since the start still the same my guy. Just buy and keep on keeping on.
Did they raise the expense ratio???
What are your thoughts on MBOX - Freedom Day Dividend ETF? Thank you.
Thoughts on keurig Dr Pepper (KDP), Wendy’s (WEN), AIA Group (AAGIY). I bought all three last week.
i low key want underperformance, since it means higher yield and more reinvested shares in the long run.
I have more growth oriented tech and its a hedge if the market goes bear. in that case schd should outperform.
Paying monthly dividend similar to DGRW makes it better investment choice and helps fund grow even quicker for everyone. Higher frequency pay-out helps investor implement DCA strategy more efficiently.
SCHD outperformed VTV over 5 and 10 years and is very low cost. Just had bad luck this year. Many of us have a boatload in the S&P500 index in 401k's, so not having apple, Microsoft etc as top holdings (if at all) in SCHD is a good thing. Still have the bulk of my $500k portfolio in SCHD.
I’m taking the hybrid approach, VOO, SCHD as my foundation, with growth like MA, UNH, HD. And slow growth like O and PEP. I have a 20 year time horizon. But the best part is I still enjoy my life while I do this. Travel, and buy ONLY things I love. It’s the best combo, plus I love the small victories with receiving dividends/dividend growth/share price appreciation.
If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance but if you want to make your money work for you...prevent inflation
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Jane Roy
They change up every year. No biggie.
They traded out some that are at their high to put in some that are down. Might get some good appreciation as well as a higher safer dividend.
The drop of Broadcom still surprised me. Great growth in both shareprice and dividend. 🤔
I like SCHD and it's qualified divs if it continues to match DIVO's regular income divs 10 yr performance all day long.
why it would sell ITW???
I'm keeping my large position in SCHD but will now start building other dividend ETF positions for Diversifikation...
6:07 "Holding SCHD won't result in you losing money unless there's some unexpected market crash tomorrow." Well, maybe. There are going to be some unlucky people who buy into the fund just before it reconstitutes and sells off all the companies whose share price has increased significantly this year (such as AVGO). That will generate a capital gain for SCHD shareholders. If someone buys SCHD at the wrong time, they are going to get hit with the tax bill without having participated in the share price appreciation. Market gains and dividend yield may not be enough to offset the taxes owed for those folks.
Most these CZcams influencers doesn't understand how algorithm based passive ETFs works..
Suprised PFE is still on the list.
Based on the changes, it seems like SCHD if focusing more on dividends, and less on growth.
Trimming overvalued positions
Honestly still looks pretty good, I was expecting gloom and doom. There are market cycles so some of the companies they invested in may grow more than expected and allow a higher dividend. The dividend growth doesn't need to be 14% each year it's completely reasonable to have like 6-9% dividend growth as long as the dividend itself is good.
i saw some banks added, i would steer clear of those, looks like more will be failing..
I like schd schb schg
ditto
Great video
Rebalancing based on the index is not a strategy change. You acknowledge it's a rules based decision but then say it's a strategy change.
It did not change it's strategy. That's click bait in my opinion.
It didn't change its strategy.
I'm slightly positive on 3M from being down 10% .
Gotta determine if trends will continue down here.
New CEO incoming so let us pray 🙏
I mean, mmm is always good buy; it is shameful that it get remove. Same as ADP
3m is in a cash crunch this year.. and that dividend is not safe anymore man.
Schd has been disappointedly underperforming past couple of years. Thinking about replace it with something else.
How did you feel about it in 2022 when VOO was down 22% and SCHD was only down 6%?
Did you sell out of VOO at that time because it was underperforming?
Some TERRIBLE additions