Fund Comparison

Schwab offers two “prime” money market mutual funds: the Schwab Value Advantage Money Fund Ultra Shares (SNAXX) and the Schwab Value Advantage Money Fund Investor Shares (SWVXX). Many investors ask about the differences between these two funds since they are two of the largest prime money market mutual funds in the market today. When comparing SNAXX vs SWVXX, it is clear which fund is best for most investors.

The Short Answer

SNAXX and SWVXX are two share classes of the exact same fund! There is no need to compare SNAXX vs SWVXX because the only difference is the minimum initial investment amount and the expense ratio. Investors who can make an initial purchase of $1M or more will get a higher yield with SNAXX.

SNAXX vs SWVXX Historical Performance

Since its inception, SNAXX has outperformed SWVXX by .10% on an annualized basis. This has compounded to a 2.05% cumulative difference over the past 17 years, which is relatively small. Currently the yield difference is about .15% however, so future performance may deviate further.

Current Yields for SWVXX & SNAXX

The current 7 day yield is a standardized yield metric for money market mutual funds and the 7 day yields for both SNAXX and SWVXX can be found on the fund’s webpages. See here for SNAXX and here for SWVXX.

What rate is SNAXX & SWVXX paying?

The current interest rate for SNAXX, SWVXX, and other Schwab money markets can be found on Schwab’s money market page.

SWVXX & SNAXX Details

The expense ratio is .34% for the SWVXX investor shares and .19% for the SNAXX ultra shares. Since the funds are just different share classes of the same portfolio, this difference in expenses is what accounts for the differences in yield and performance. Neither fund charges a load or 12b-1 fees.

SWVXX has no minimum investment and investors can invest as little as one cent, while SNAXX has a minimum investment of $1 million. My observation is that investors can keep SNAXX even if they sell and their balance falls below $1 million. The $1 million minimum seems to only apply to the initial purchase.

I have not checked every brokerage, but SNAXX and SWVXX is generally only available to clients of Charles Schwab.

Like most money market mutual funds, investors can sell SNAXX or SWVXX at any time.

SWVXX & SNAXX Risks

Hypothetically, an investor could lose money with SNAXX or SWVXX, but I personally do not think that is a realistic risk as I believe the fund sponsor or the federal government would intervene if that were about to happen. Technically, it is possible to lose money in SWVXX or SNAXX though.

As of June 30, 2023, the fund had nearly $210 billion in net assets. This was composed of approximately $130 billion in the investor shares and $80 billion in ultra shares.

Is SWVXX or SNAXX FDIC Insured?

No, neither SWVXX nor SNAXX are FDIC insured.

Holdings

The two funds are share classes of the same portfolio, so the holdings are identical. The largest holding is repurchase agreements (repos) at 42.6%, followed by CDs at 24.5%, and commercial paper at 18.4%. The vast majority of the fund’s holdings have a maturity of less than one week (81%).

High Balances

Investors allocating more than $1 million may want to consider the “ultra” share class of the fund, whose symbol is SNAXX.

Tax Considerations

SWVXX and SNAXX are “prime” funds which means that it can invest in both government and non-government financial instruments. However, taxable investors may find better after-tax yields in government or municipal (muni) money market funds, both of which offer tax benefits that may improve investors’ after-tax yield.

Government and Treasury Money Market Funds

Most states have an income tax. However, interest from Treasuries is exempt from state tax. Therefore, investors in states with income tax may be better off with a Treasury money market fund (such as SNSXX or SUTXX) that only invests in Treasuries.

Muni Money Market Funds

Investors subject to higher tax rates may consider municipal (muni) money market funds due to the fact the interest is typically exempt from federal income tax (and often from state tax too!).

The caveat with muni money market funds though is that the yields can move up and down A LOT. Therefore, the stated yield that an investor looks up on any given day is not necessarily indicative of the future return. To understand why, read my post on muni money market yields.

Rather than expecting a muni money market fund’s stated yield, I encourage investors to expect the trailing average yield (over the past few weeks). Generally speaking, the after tax returns of munis will only be higher than non-muni money markets for those in the highest tax brackets.

Which is Best? SNAXX or SWVXX?

Overall, SWVXX is a good investment for many situations (and I have used it many times). Those investing more than $1 million should generally go with SNAXX for the higher yield. Investors who are subject to high tax rates may want to consider other funds though.

The JP Morgan Equity Premium Income ETF (symbol JEPI) is one the most popular covered call ETFs in the market right now. Interestingly, JP Morgan launched a mutual fund version of the fund a couple years before launching the ETF, which is the similarly-named JP Morgan Equity Premium Income Fund (symbol JEPIX). Many investors compare JEPI vs JEPIX to see if the differences are material and/or which one should be used in a portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

When comparing JEPI vs JEPIX, it is clear that the holdings and performance is nearly identical. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

That being said, I generally advise against using covered call strategies (except in very limited scenarios). My rationale and details can be found in my review of JEPI.

The Longer Answer

Investors should evaluate several factors before deciding whether to use JEPIX or JEPI.

Historical Performance: JEPIX vs JEPI

JEPIX was launched back in 2018 and JEPI was launched a few years later on May 20, 2020. Since that time, performance has been nearly identical: 13.32% for JEPI vs 13.00% for JEPIX (annualized). Even the cumulative difference in performance over that time period is less than 1.5%! Looking at the chart of JEPIX vs JEPI below, it is obvious that the risk and return is identical even if the holdings are not.

Interestingly, the .32% difference in annualized performance is similar to the .25% difference in fund expenses.

Differences Between JEPIX and JEPI

The geographic exposures, sector weights, market cap coverage so on are nearly identical. There are some commentary on the internet indicating differences, but that is incorrect.

Geography; JEPI vs JEPIX

Both funds own 100% US stocks, so I won’t delve into geographic or country differences here.

Market Cap: JEPI vs JEPIX

The market cap exposure of the underlying portfolios are nearly identical.

	JEPI	JEPIX
Large Cap	83%	82%
Mid Cap	16%	18%
Small Cap	0%	0%

Sector Exposure: JEPI vs JEPIX

The underlying sector exposure of the two funds is nearly identical. Of course, each fund is also writing index calls against these exposures, so any differences may be magnified a small amount. But overall, the funds are quite similar.

	JEPI	JEPIX
Basic Materials	3.78%	3.79%
Consumer Cyclical	8.97%	9.28%
Financial Services	12.53%	12.37%
Real Estate	3.62%	3.69%
Communication Services	5.26%	4.96%
Energy	3.05%	2.78%
Industrials	13.46%	13.63%
Technology	17.12%	17.46%
Consumer Defensive	13.09%	13.04%
Healthcare	14.23%	13.45%
Utilities	4.90%	5.53%

Factors to Consider

Expenses

Some investors may point out that the expense ratios between JEPI and JEPIX differ. This is true, but it is also reflected in the net performance chart above as the majority of the performance difference is due to fees. At a certain level, differences in expense ratios do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis) and is often smaller than the bid-ask spread (see transaction costs below). Expenses do matter, but I would not sweat small differences (as they’ll show up in net performance anyways).

Transaction Costs

ETFs are free to trade at many brokers and custodians. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, JP Morgan does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at JP Morgan, it may b free to trade JEPIX or JEPI. However, only JEPI is free to trade in non-JP Morgan accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .02% for JEPI and individual investor trades will not generally be large enough to “move” the market. In the case of JEPI, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post).

I noticed some posts on the internet saying that JEPI is more tax-efficient than JEPIX, but this incorrect and neither JEPI not JEPIX has ever made a capital gain distribution. Some may interpret this as the funds being tax-efficient. However, it is really the opposite. The funds’ strategy of covered calls converts a lot of capital gain returns into income returns and the funds do not pay capital gains because much of it is converted to income! Therefore, I would neither JEPI nor JEPIX is tax-efficient.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards JEPIX. If all ETFs, I might lean more towards JEPI.

On this topic, investors should probably avoid using JEPI and JEPIX as tax loss harvesting substitutes for one another since they could be considered “substantially identical” which would trigger a wash sale.

Tradability

JEPIX does have a stated minimum initial purchase of $1 million, but these types of minimums are often lowered depending on an investors brokerage platform. Nonetheless, this may be a factor for some investors looking to initiate a position. The minimum purchase size for JEPI is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: JEPIX vs JEPI

If an investor has made up their mind to invest in one of these funds, they should consider the above factors when deciding whether the mutual fund JEPIX or the ETF JEPI is best for their personal situation. That being said, I do not recommend investors use covered call strategies (except in very, very limited cases).

The Vanguard Total Stock Market ETF (symbol: VTI) and Vanguard Total World Stock ETF (symbol: VT) are two of the most popular ETFs in the market. As their names imply, VT holds stocks from the entire world, while VTI only holds American stocks. Given the funds’ popularity, many people compare VT vs VTI or ask which fund is a better investment. However, the two funds are completely different and not comparable.

The Short Answer

VT and VTI are very different and not comparable. The primary consideration when evaluating VT vs VTI is whether the investor wants the simplest portfolio or plans to manage the geographic weights more granularly. This assuming that the investor wants to use ETFs rather than direct indexing, mutual funds, etc.

My goal here at ThoughtfulFinance.com is to educate investors and that sometimes includes not answering the exact question that was asked, reframing questions, or providing a different type of answer. As always though, a quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors).

Note: Investors in High Tax Brackets

Investors who are in the highest tax brackets and are investing at least a few hundred thousand dollars should generally look beyond VT, VTI, other ETFs (or mutual funds) and consider direct indexing for taxable assets. That is beyond the scope of this post, but a third-party generally handles everything and the tax benefits may be substantial.

VTI vs VT: Performance & Expenses

I could compare VTI and VT’s historical performance, expense ratios, tax-efficiency, and so on as many sites do. However, these details are only important points of comparison if the funds are comparable, so this post doesn’t include a bunch of meaningless data. Those who are still interested can check out ETF.com’s comparison tool.

Historical Performance

VTI was launched in mid-2001, while VTI was launched in mid-2008. Since then, VTI has returned 10.82% versus VT’s 7.06%. Thus VTI has outperformed by a wide margin (of over 3.75% annualized). This annualized difference has compounded over time to over 190%. This has largely been driven by the US’s outperformance relative to the rest of the world over the past 15 years. This outperformance may or may not continue in the future.

That being said, comparing historical performance of VT vs VTI is meaningless as they have objectives, holdings, exposures, and so on. One fund will outperform over certain time periods and the other will outperform over other time periods.

Expenses

VTI’s expense ratio is .03%, while VT is at .07%. Again, any performance difference caused by the expense ratios of VTI and VT will be dwarfed by larger differences like holdings, exposures, risk factors, etc. Expenses are very important when all else is equal, but VTI and VT are not equal at all!

VTI vs VT: Holdings & Exposures

VTI and VT are not comparable because their underlying holdings are so different. An investor’s preference for VTI or VT will depend on its role in the portfolio. That being said, the two funds are relatively similar.

VT tracks the FTSE Global All Cap Index, while VTI tracks the CRSP US Total Market Index.

Holdings

The holdings of VT and VTI are quite different (VT essentially owns everything that VTI does plus more).

	VT	VTI
Number of Stocks	9,570	3,861
Median Market Cap	$71.6 billion	$138.7 billion
Fund Assets (including all share classes)	$39.9 billion	$1.4 trillion

Market Cap

Both VT and VTI are total market funds that include all market caps and are cap-weighted towards large caps. The market cap exposures of the two funds are nearly identical.

	VT	VTI
Large Cap	75%	72%
Mid Cap	19%	20%
Small Cap	6%	9%

Sector Exposure

Both funds are well-diversified across sectors and their sector weights do not materially differ.

	VT	VTI
Basic Materials	4.74%	2.48%
Consumer Cyclical	11.40%	10.86%
Financial Services	15.10%	12.44%
Real Estate	3.09%	3.08%
Communication Services	7.04%	7.95%
Energy	4.70%	4.31%
Industrials	11.24%	9.47%
Technology	21.84%	27.71%
Consumer Defensive	6.71%	6.09%
Healthcare	11.45%	13.14%
Utilities	2.69%	2.48%

Geographic Exposure

VTI holds essentially 100% US stocks, while VT owns stocks from the US, developing markets, and emerging markets.

	VT	VTI
Developing Markets	90%	100%
Emerging Markets	10%	0%

Below are the top country exposures of each fund.

	VT	VTI
US	60.5%	100%
Japan	6.2%	0%
UK	3.8%	0%
China	3.3%	0%
Canada	2.8%	0%

ETF Benefits

Both VTI and VT are exchange-traded funds (ETFs), which do have some advantages for investors.

Tax Efficiency

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither fund has ever made a capital gains distribution, nor do I expect either to. Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Tradability

ETFs are free to trade on many platforms the bid-ask spread is extremely low for both VT and VTI. Individuals investors should have no problem trading VTI or VT, which are both large and liquid.

Alternative Vehicles

Investors limited to mutual funds should have no problem finding a mutual fund version of VTI (such as VTSAX) or a mutual fund version of VT (such as VTWAX).

Investors planning to allocate more than $250,000 may consider direct indexing rather than an ETF or mutual fund, especially if they are in a high tax bracket. Any institutional direct indexer should be able to replicate VTI or VT easily.

Types of Investors

There are a few reasons that someone might want to know whether VTI or VT is a better investment and I think it has a lot to do with who they are. Different types of investors have varying levels of knowledge, differing goals, and so on.

New Investors

For new investors without much investing experience, I generally recommend just buying a global fund (such as VT) for equity exposure. A single fund provides all of the asset allocation and diversification one needs without worrying about geographic tilts, rebalancing, and so on. Using a single fund could even be a great choice for experienced investors who crave simplicity.

Most Investors

While VT is a great option, separating equity exposure into two (or more) funds allows for more personalized allocations and tax-efficiency.

By using VTI for US exposure and an international fund for non-US exposure, investors can fine-tune a portfolio’s geographic weights. VT owns approximately 60% US stocks (as of 6/30/2023) and 40% non-US stocks. However, an investor may want 70% US stocks and could invest 70% of their assets in VTI and 30% in an international fund. Many investors (including myself) may fine-tune further split the international exposure into a developed markets fund and an emerging markets fund. Of course, an investor could just buy VT as a core position and then buy VTI, an international fund, or whatever as a satellite position to tilt their portfolio towards US, non-US, etc. Admittedly, I have not seen this often and probably would not advise it, but theoretically investors do not have choose VT or VTI as both can be used in a portfolio IF its thoughtfully constructed.

One benefit of using multiple funds is that there will be more opportunities for tax-loss harvesting. Imagine a situation where US stocks go up 5% and non-US stocks decline by 5%. In this case, VT would be up by 1% (calculated as 60% US stocks x 5% + 40% non-US stocks x -5%). However, if an investor held VTI and a non-US fund, they could hold VTI while selling the non-US fund (and rotating into another non-US fund) to realize a tax loss. In this case, the investor would have better after-tax returns by using two funds. Of course, the more assets and the higher dispersion between the assets’ returns (known as cross sectional volatility), the better the after-tax returns could be.

Using two funds rather than one fund only makes sense if an investor has a view on US vs non-US weights OR has the capacity and discipline to monitor and take advantage of tax-loss harvesting opportunities. If neither of these is the case, it may be better to just go with the simple one fund portfolio of VT.

What Would I Do: VTI or VT?

In my opinion, both VT and VTI are well-constructed funds that do what they are designed to do. Using one versus another is not about selecting the “better” fund, but about how they are used in a portfolio. As noted above, I would use VT if I wanted a simple, low-maintenance, one-fund portfolio. For those who want to customize their portfolio a bit more, using region-specific funds such as VTI might be the way to go.

Frequently Asked Questions (FAQs)

VTI is one of the largest ETFs and is a core holding of many portfolios, while SCHD is a popular dividend-oriented ETF. SCHD targets high-dividend stocks (as they are defined by the index provider). Even though VTI and SCHD play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards higher dividends or to stick with a broad-based index. Please read on for a comparison of SCHD vs VTI.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

SCHD focused on large-cap stocks that pay higher dividends, which also tend to be more value-oriented stocks. VTI owns a more diverse portfolio of all market caps and investment styles. Historical performance has been similar, but will depend on how the size and value factors perform moving forward.

The Longer Answer

Historical Performance: SCHD vs VTI

Since their common inception in 2011, performance has been relatively similar with an annualized difference of only .5%. This has compounded over time though and the cumulative performance differential is about 24%!

As the SCHD vs VTI chart shows, the value factor has really underperformed the broader market since their common inception. However, this did change in 2022 as lines begin to converge again. It is anyone’s guess whether growth or value will perform better in the future.

Differences Between SCHD and VTI

The primary difference between these two funds is that SCHD tracks the Dow Jones U.S. Dividend 100 Index, while VTI tracks the broader CRSP US Total Market Index.

For those wondering what stocks end up in SCHD’s portfolio, SCHD first filters out any stocks that have not paid dividends for at least 10 years. The remaining stocks are then filtered based on fundamental criteria and then position and sector caps are instituted to keep the portfolio diversified.

Geographic Exposure

Both SCHD and VTI hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of SCHD and VTI are relatively similar.

	SCHD	VTI
Large Cap	79%	72%
Mid Cap	18%	19%
Small Cap	3%	9%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that SCHD is targeting the dividends and some sectors pay higher dividends.

	SCHD	VTI
Basic Materials	1.96%	2.48%
Consumer Cyclical	9.68%	10.89%
Financial Services	15.52%	12.17%
Real Estate	0.00%	3.12%
Communication Services	4.30%	7.71%
Energy	9.41%	4.14%
Industrials	18.34%	9.53%
Technology	12.23%	27.80%
Consumer Defensive	12.92%	6.17%
Health Care	15.34%	13.50%
Utilities	0.30%	2.51%

Expenses

SCHD’s expense ratio is .06%, while VTI’s expense ratio is .03%. Yes, SCHD is 2x more expensive than VTI, but we’re talking about 3 basis points! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SCHD and VTI should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SCHD and VTI is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither SCHD nor VTI has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts. SCHD does have a slightly higher tax drag from dividends, but its relatively small.

Final Thoughts: SCHD vs VTI

Both funds are great ETFs that do what they are designed to do. I would not personally use dividend ETFs as the core of a portfolio, but that is a personal opinion and not necessarily the consensus. For a core position, I would personally choose VTI every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using SCHD. At the end of the day, these two funds are not necessarily comparable because they play slightly different roles in a portfolio.

Frequently Asked Questions (FAQs)

The Fidelity MSCI Information Technology ETF (FTEC) and the Invesco QQQ ETF (QQQ) are two popular ETFs. FTEC is a tech sector ETF, while QQQ is a core holding of many investor portfolios. Each is diversified in a different way; QQQ by sector and FTEC by market-cap. Investors evaluating FTEC vs QQQ for their portfolio should consider the below factors.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

The main differences between the funds is that QQQ is a tech-oriented large-cap fund, while FTEC is 100% tech stocks (of all market caps). QQQ has a lot of technology exposure, but has exposure to other sectors as well.

The Longer Answer

Historical Performance: QQQ vs FTEC

QQQ was launched on in 1999, while FTEC was launched in October 2013. Since then, FTEC has outperformed by nearly 2% annually. The cumulative performance differential over that time period is about 86%! That being said, the performance between these two funds is relatively close, considering their differences.

Differences between QQQ vs FTEC

The two main differences between FTEC and QQQ are their sector exposures and market cap exposures. FTEC tracks the tech-only MSCI US Investable Market Information Technology 25/50 Index which includes tech stocks of all market caps. QQQ tracks the Nasdaq 100 Index which is primarily large caps, but covers many sectors (even though it is heavily weighted towards tech).

Geographic Exposure

Both FTEC and QQQ hold essentially 100% stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

QQQ is essentially a large cap fund, while FTEC is more of an all cap fund. Due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings though.

	FTEC	QQQ
Large-Cap	80%	91%
Mid-Cap	11%	10%
Small-Cap	8%	0%

Sector Weights

The sector weights between FTEC and QQQ are nearly identical.

	FTEC	QQQ
Basic Materials	0.02%	0.00%
Consumer Cyclical	0.00%	13.77%
Financial Services	0.13%	0.59%
Real Estate	0.00%	0.27%
Communication Services	0.18%	15.35%
Energy	0.00%	0.52%
Industrials	0.34%	4.89%
Technology	99.33%	49.62%
Consumer Defensive	0.00%	6.57%
Healthcare	0.00%	7.17%
Utilities	0.00%	1.24%

Expenses

The expense ratio for FTEC is .084%, while QQQ’s expense ratio is .20%. Although QQQ’s expense ratio is 100%+ higher than FTEC’s, its only 12 basis points in absolute terms.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both FTEC and QQQ should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread for FTEC is currently about .03% and QQQ is about .01%, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). As expected, neither QQQ nor FTEC has ever made a capital gains distribution (nor do I expect them to). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Final Thoughts: QQQ vs FTEC

Both FTEC and QQQ are large, popular funds sponsored and managed by two of the largest asset managers in the world. Although FTEC and QQQ are quite different, performance has been relatively similar. Although each fund is diversified in a different way, neither fund is really diversified. Either fund can be a piece of a portfolio rather than core holding. Investors just need to decide sectors and market caps they want exposure to when deciding between FTEC and QQQ.

Frequently Asked Questions (FAQs)

The Vanguard High Dividend Yield ETF (VYM) and the Schwab US Dividend Equity ETF (SCHD) are two of the largest dividend-oriented ETFs in the market. Even though both target stocks that pay higher-than-average dividends, the two funds use different criteria. Many investors compare SCHD vs VYM in order to determine which would the best fit for their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

SCHD and VYM use slightly different methodologies that has resulted in slight performance differences (especially since 2020). VYM is tilted more towards the value factor. Historical performance of SCHD vs VYM has been similar most years, but may depend on how the value and growth factors perform moving forward.

The Longer Answer

Historical Performance: SCHD vs VYM

Since the common inception date in 2011, performance has been relatively similar with an annualized difference of roughly 1.5%. This has compounded over time though and the cumulative performance differential is about 62%!

As the SCHD vs VYM chart of historical performance illustrates, the two funds performed similarly for a long time. However, SCHD has outperformed by a wide margin over the past several years.

Differences Between SCHD and VYM

The primary difference between these two funds is the methodology that they use to select which stocks are included.

SCHD first filters out any stocks that have not paid dividends for at least 10 years. The remaining stocks are then filtered based on fundamental criteria and then position and sector caps are instituted to keep the portfolio diversified.

VYM does share much about its methodology in its prospectus other than saying it will invest in stocks that pay higher than average dividends. Looking at the portfolio, this result in more of a value tilt and greater exposure to high-dividend low-growth sectors like utilities.

Geographic Exposure

Both SCHD and VYM hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of SCHD and VYM are relatively similar.

	SCHD	VYM
Large Cap	79%	76%
Mid Cap	18%	18%
Small Cap	3%	5%

Sector Weights

Sector weights are relatively similar with just a notable difference in utilities.

	SCHD	VYM
Basic Materials	1.96%	2.34%
Consumer Cyclical	9.68%	7.02%
Financial Services	15.52%	19.45%
Real Estate	0.00%	0.01%
Communication Services	4.30%	3.69%
Energy	9.41%	10.22%
Industrials	18.34%	12.16%
Technology	12.23%	9.62%
Consumer Defensive	12.92%	14.65%
Health Care	15.34%	13.63%
Utilities	0.30%	7.21%

Expenses

Both SCHD and VYM only charge 6 basis points (or a .06% expense ratio).

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SCHD and VYM should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SCHD and VYM is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither SCHD nor VYM has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts, although the dividends do create a very slight tax drag.

Final Thoughts: SCHD vs VYM

Both funds are great ETFs that do what they are designed to do. I would not personally use dividend ETFs as the core of a portfolio, but that is a personal opinion and not necessarily the consensus. However, investors looking for a dividend-oriented fund could do a lot worse than using SCHD or VYM.

Frequently Asked Questions (FAQs)

The Vanguard S&P 500 ETF (SCHX) is one of the largest ETFs and is a core holding of many portfolios, while the Schwab US Dividend Equity ETF (SCHD) is a popular dividend-oriented ETF. In this case, SCHD targets stocks that meet certain dividend-related requirements (as they are defined by the index provider). Even though SCHX and SCHD play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a dividends or the value factor.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

SCHD only owns stocks that meet the Dow Jones U.S. Dividend 100™ Index’s requirements, which has the effect of tilting the portfolio towards the value factor. SCHX owns a more diverse portfolio including growth stocks. Historical performance of SCHD vs SCHX has been similar, but will depend on how the value and growth factors perform moving forward.

The Long Answer

Historical Performance: SCHD vs SCHX

Since the common inception date in 2011, performance has been relatively similar with an annualized difference of roughly .7%. This has compounded over time though and the cumulative performance differential is about 29%.

As the SCHD vs SCHX chart of historical performance illustrates, SCHX has outperformed over the past decade or so. However, SCHD has outperformed over several periods of time including the calendar year of 2022 when the growth factor really underperformed the value factor.

Differences Between SCHD and SCHX

The primary difference between these two funds is that SCHD tracks the Dow Jones U.S. Dividend 100™ Index, while SCHX tracks the broader S&P 500 index.

Geographic Exposure

Both SCHD and SCHX hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of SCHD and SCHX are relatively similar.

	SCHD	SCHX
Large Cap	78%	78%
Mid Cap	17%	20%
Small Cap	4%	2%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that SCHD is targeting high dividends and some sectors meet this criteria more easily.

	SCHD	SCHX
Basic Materials	1.95%	2.26%
Consumer Cyclical	9.66%	10.71%
Financial Services	14.42%	12.18%
Real Estate	0.00%	2.78%
Communication Services	4.63%	8.40%
Energy	9.06%	4.12%
Industrials	17.48%	8.40%
Technology	13.34%	28.90%
Consumer Defensive	13.49%	6.29%
Health Care	15.69%	13.42%
Utilities	0.28%	2.55%

Expenses

SCHD’s expense ratio is .06%, while SCHX’s expense ratio is .03%. Yes, SCHD is 100% more expensive than SCHX, but we’re talking about 3 basis points! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SCHD and SCHX should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SCHD and SCHX is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither SCHD nor SCHX has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts, although the dividends do create a very slight tax drag.

Final Thoughts: SCHD vs SCHX

Both funds are great ETFs that do what they are designed to do. I would not personally use dividend ETFs as the core of a portfolio, but that is a personal opinion and not necessarily the consensus. For a core position, I would personally choose SCHX every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using SCHD. At the end of the day, these two funds are not necessarily comparable because they play slightly different roles in a portfolio.

The iShares S&P 500 ETF (IVV) is one of the largest ETFs and is a core holding of many portfolios, while the Schwab US Dividend Equity ETF (SCHD) is a popular dividend-oriented ETF. In this case, SCHD targets stocks that meet certain dividend-related requirements (as they are defined by the index provider). Even though IVV and SCHD play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a dividends or the value factor.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

SCHD only owns stocks that meet the Dow Jones U.S. Dividend 100™ Index’s requirements, which has the effect of tilting the portfolio towards the value factor. IVV owns a more diverse portfolio including growth stocks. Historical performance of SCHD vs IVV has been similar, but will depend on how the value and growth factors perform moving forward.

The Long Answer

Historical Performance: SCHD vs IVV

Since the common inception date in 2011, performance has been relatively similar with an annualized difference of roughly .8%. This has compounded over time though and the cumulative performance differential is about 35%.

As the SCHD vs IVV chart of historical performance illustrates, IVV has outperformed over the past decade or so. However, SCHD has outperformed over several periods of time including the calendar year of 2022 when the growth factor really underperformed the value factor.

Differences Between SCHD and IVV

The primary difference between these two funds is that SCHD tracks the Dow Jones U.S. Dividend 100™ Index, while IVV tracks the broader S&P 500 index.

Geographic Exposure

Both SCHD and IVV hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of SCHD and IVV are relatively similar.

	SCHD	IVV
Large Cap	78%	82%
Mid Cap	17%	18%
Small Cap	4%	0%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that SCHD is targeting high dividends and some sectors meet this criteria more easily.

	SCHD	IVV
Basic Materials	1.95%	2.26%
Consumer Cyclical	9.66%	10.60%
Financial Services	14.42%	12.23%
Real Estate	0.00%	2.53%
Communication Services	4.63%	8.59%
Energy	9.06%	4.33%
Industrials	17.48%	8.28%
Technology	13.34%	28.13%
Consumer Defensive	13.49%	6.72%
Health Care	15.69%	13.66%
Utilities	0.28%	2.68%

Expenses

SCHD’s expense ratio is .06%, while IVV’s expense ratio is .03%. Yes, SCHD is 100% more expensive than IVV, but we’re talking about 3 basis points! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SCHD and IVV should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SCHD and IVV is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither SCHD nor IVV has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts, although the dividends do create a very slight tax drag.

Final Thoughts: SCHD vs IVV

Both funds are great ETFs that do what they are designed to do. I would not personally use dividend ETFs as the core of a portfolio, but that is a personal opinion and not necessarily the consensus. For a core position, I would personally choose IVV every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using SCHD. At the end of the day, these two funds are not necessarily comparable because they play slightly different roles in a portfolio.

The State Street SPDR S&P 500 Trust ETF (SPY) is the largest ETF and is a core holding of many portfolios, while the Schwab US Dividend Equity ETF (SCHD) is a popular dividend-oriented ETF. In this case, SCHD targets stocks that meet certain dividend-related requirements (as they are defined by the index provider). Even though SPY and SCHD play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a dividends or the value factor.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

SCHD only owns stocks that meet the Dow Jones U.S. Dividend 100™ Index’s requirements, which has the effect of tilting the portfolio towards the value factor. SPY owns a more diverse portfolio including growth stocks. Historical performance of SCHD vs SPY has been similar, but will depend on how the value and growth factors perform moving forward.

The Long Answer

Historical Performance: SCHD vs SPY

Since the common inception date in 2011, performance has been relatively similar with an annualized difference of roughly .8%. This has compounded over time though and the cumulative performance differential is about 33%.

As the SCHD vs SPY chart of historical performance illustrates, SPY has outperformed over the past decade or so. However, SCHD has outperformed over several periods of time including the calendar year of 2022 when the growth factor really underperformed the value factor.

Differences Between SCHD and SPY

The primary difference between these two funds is that SCHD tracks the Dow Jones U.S. Dividend 100™ Index, while SPY tracks the broader S&P 500 index.

Geographic Exposure

Both SCHD and SPY hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of SCHD and SPY are relatively similar.

	SCHD	SPY
Large Cap	78%	82%
Mid Cap	17%	18%
Small Cap	4%	0%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that SCHD is targeting high dividends and some sectors meet this criteria more easily.

	SCHD	SPY
Basic Materials	1.95%	2.26%
Consumer Cyclical	9.66%	10.75%
Financial Services	14.42%	12.08%
Real Estate	0.00%	2.48%
Communication Services	4.63%	8.58%
Energy	9.06%	4.21%
Industrials	17.48%	8.26%
Technology	13.34%	28.55%
Consumer Defensive	13.49%	6.62%
Health Care	15.69%	13.58%
Utilities	0.28%	2.61%

Expenses

SCHD’s expense ratio is .06%, while SPY’s expense ratio is .095%. Yes, SPY is 50%+ more expensive than SCHD, but we’re talking about 3.5 basis points! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SCHD and SPY should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SCHD and SPY is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither SCHD nor SPY makes capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts, although the dividends do create a very slight tax drag.

Final Thoughts: SCHD vs SPY

Both funds are great ETFs that do what they are designed to do. I would not personally use dividend ETFs as the core of a portfolio, but that is a personal opinion and not necessarily the consensus. For a core position, I would personally choose SPY every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using SCHD. At the end of the day, these two funds are not necessarily comparable because they play slightly different roles in a portfolio.

The Vanguard S&P 500 ETF (VOO) is one of the largest ETFs and is a core holding of many portfolios, while the Schwab US Dividend Equity ETF (SCHD) is a popular dividend-oriented ETF. In this case, SCHD targets stocks that meet certain dividend-related requirements (as they are defined by the index provider). Even though VOO and SCHD play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a dividends or the value factor.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

SCHD only owns stocks that meet the Dow Jones U.S. Dividend 100™ Index’s requirements, which has the effect of tilting the portfolio towards the value factor. VOO owns a more diverse portfolio including growth stocks. Historical performance of SCHD vs VOO has been similar, but will depend on how the value and growth factors perform moving forward.

The Long Answer

Historical Performance: SCHD vs VOO

Since the common inception date in 2011, performance has been relatively similar with an annualized difference of roughly .8%. This has compounded over time though and the cumulative performance differential is about 36%.

As the SCHD vs VOO chart of historical performance illustrates, VOO has outperformed over the past decade or so. However, SCHD has outperformed over several periods of time including the calendar year of 2022 when the growth factor really underperformed the value factor.

Differences Between SCHD and VOO

The primary difference between these two funds is that SCHD tracks the Dow Jones U.S. Dividend 100™ Index, while VOO tracks the broader S&P 500 index.

Geographic Exposure

Both SCHD and VOO hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of SCHD and VOO are relatively similar.

	SCHD	VOO
Large Cap	78%	83%
Mid Cap	17%	17%
Small Cap	4%	0%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that SCHD is targeting high dividends and some sectors meet this criteria more easily.

	SCHD	VOO
Basic Materials	1.95%	2.35%
Consumer Cyclical	9.66%	10.17%
Financial Services	14.42%	12.59%
Real Estate	0.00%	2.62%
Communication Services	4.63%	8.28%
Energy	9.06%	4.69%
Industrials	17.48%	8.18%
Technology	13.34%	26.42%
Consumer Defensive	13.49%	7.32%
Health Care	15.69%	14.49%
Utilities	0.28%	2.88%

Expenses

SCHD’s expense ratio is .06%, while VOO’s expense ratio is .03%. Yes, SCHD is 100% more expensive than VOO, but we’re talking about 3 basis points! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SCHD and VOO should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SCHD and VOO is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither SCHD nor VOO has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts, although the dividends do create a very slight tax drag.

Final Thoughts: SCHD vs VOO

Both funds are great ETFs that do what they are designed to do. I would not personally use dividend ETFs as the core of a portfolio, but that is a personal opinion and not necessarily the consensus. For a core position, I would personally choose VOO every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using SCHD. At the end of the day, these two funds are not necessarily comparable because they play slightly different roles in a portfolio.