SCHD Now Concentrates 41% of Assets in Just 10 Stocks

The latest fact sheet for the Schwab U.S. Dividend Equity ETF (SCHD) reveals that its top 10 holdings now account for 41% of its $71.6 billion in net assets, significantly higher than the typical 30% top-10 weight of comparable large-cap dividend funds.

Details

The fund, which tracks the Dow Jones U.S. Dividend 100 Index, has become more concentrated in a handful of stocks. Its largest holdings include Coca-Cola (KO), Chevron (CVX), AbbVie (ABBV), Bristol-Myers Squibb (BMY), and ConocoPhillips (COP). This concentration means the fund's performance is increasingly tied to the performance of these few stocks.

Context

Investors typically buy index funds like SCHD for broad diversification. However, with 41% of assets in just 10 stocks, investors face higher concentration risk than expected. Nonetheless, the fund still offers attractive dividend yields at a low cost.

What This Means for Investors

Investors holding SCHD should review their portfolios to ensure the concentration level aligns with their goals. The fund may be suitable for those seeking high dividend income and willing to accept concentration risk, but it may not be ideal for those seeking broad diversification.