Summary of "Finally swapping SCHD to this Value ETF (time for more gains)"

Finally Swapping SCHD to This Value ETF (Time for More Gains)

Presenter: Nolan Goa (aka Professor G)

ETFs Discussed

SCHD (Schwab U.S. Dividend Equity ETF)

Index tracked: Dow Jones U.S. Dividend 100 Index
Focus: U.S. stocks with strong, consistent dividends filtered for quality and yield
Holdings: ~100 stocks
Dividend yield: ~3.8% (higher yield)
Expense ratio: ~0.06%
Sector focus: Energy, Consumer Staples, Healthcare; very low Tech exposure
Top holdings: AbbVie (ABBV), Cisco, Merck, Pepsi, Amgen, Coca-Cola, Lockheed Martin
Historical performance: Underperformed recently, down ~0.51% YTD
Volatility: Slightly higher historically compared to VTV
Investment profile: Income-oriented, dividend quality tilt, less diversified
Best suited for: Investors seeking income (e.g., retirees), or holding in tax-advantaged accounts (IRA, Roth IRA) due to tax on dividends in brokerage accounts

VTV (Vanguard Value ETF)

Index tracked: CRSP U.S. Large Cap Value Index
Focus: Pure large-cap value stocks regardless of dividend yield
Holdings: Over 300 stocks (broader diversification)
Dividend yield: ~2.1% (lower yield)
Expense ratio: ~0.04%
Sector focus: Financials, Industrials, Healthcare; very low Tech exposure
Top holdings: JPMorgan Chase, Berkshire Hathaway, ExxonMobil, Walmart, Johnson & Johnson, AbbVie, Home Depot
Performance: Up ~11.65% YTD, outperforming SCHD recently
Volatility: Lower historically compared to SCHD
Investment profile: Broad value exposure, less focus on dividends, more price appreciation potential
Best suited for: Long-term growth investors, moderate risk profile, brokerage accounts to reduce dividend tax impact

Macroeconomic & Market Context

The market is currently considered overvalued, especially in technology and AI sectors.
Many analysts recommend a rotation into value stocks as a defensive or diversification strategy.
Technology and AI ETFs are booming but carry higher risk; value ETFs like SCHD and VTV offer lower tech exposure.
Interest rates and market sentiment impact dividend stock performance; dividend stocks may lag or lead depending on these factors.
Anticipation of rate cuts may favor value stocks with solid cash flow and dividends.

Comparative Summary

Feature SCHD VTV Index tracked Dow Jones U.S. Dividend 100 CRSP U.S. Large Cap Value Number of holdings ~100 300+ Dividend yield ~3.8% ~2.1% Expense ratio 0.06% 0.04% Sector focus Energy, Consumer Staples, Healthcare Financials, Industrials, Healthcare Tech exposure Very low Very low YTD performance -0.51% +11.65% Volatility Slightly higher Slightly lower Overlap 12% of VTV holdings overlap SCHD by number; 36% of SCHD holdings by weight overlap VTV

Portfolio Construction & Strategy Recommendations

Consider diversifying the safer portion of your portfolio by adding VTV alongside or instead of SCHD.
If seeking broad value exposure with growth potential and less dividend focus, VTV is preferred.
If seeking income with higher dividends and strong dividend quality, SCHD is preferred.
Suggested allocation shift: If holding 30-40% in growth stocks (tech/AI), consider reallocating ~10% to value ETFs.
Tax implications:
- In taxable brokerage accounts: VTV preferred to reduce dividend tax burden (lower yield).
- In tax-advantaged accounts (IRA, Roth IRA): SCHD can be held more heavily due to tax deferral/exemption on dividends.
Both ETFs can be used in both account types for diversification.
Long-term investors with 10-20 year horizon and moderate risk may lean towards VTV for appreciation.
Income-focused or retirement investors may prefer SCHD for consistent dividends and lower tech risk.

Performance Metrics & Timelines

SCHD: Slightly negative YTD (-0.51%), historically strong dividend payer.
VTV: Strong YTD performance (+11.65%), broad value exposure.
Long-term (10 years) performance between SCHD and VTV is close, with recent divergence favoring VTV.
Short-term performance is sensitive to market conditions, interest rates, and sentiment shifts.

Disclaimers

This video and summary do not constitute financial advice. Viewers are encouraged to do their own research. The presenter is not a financial advisor. Tax considerations vary by individual circumstances. Market conditions can change; past performance is not indicative of future results.

Additional Notes

Sponsorship mention: Investing.com and their ProPix Plus tool for AI-driven stock analysis and screening.
Investing.com offers a sale with a 15% discount on Pro subscriptions.
Presenter emphasizes simplifying investing and making informed decisions efficiently.

Summary

The video compares SCHD and VTV, two large-cap U.S. value ETFs with different focuses:

SCHD is dividend-oriented with higher yield and concentrated holdings.
VTV offers broader diversification with a pure value tilt and lower yield.

Given current market overvaluation in tech and AI, shifting some portfolio allocation from growth to value is recommended. VTV is favored for growth and tax efficiency in brokerage accounts; SCHD suits income-focused investors and tax-advantaged accounts. Both ETFs have roles depending on investor goals, risk tolerance, and tax situations.

Presenter: Nolan Goa (Professor G)