Has SCHD Suffered Enough?

[Deleted]

I find myself holding this non-performing ETF and I am trying to decide if I should continue to hold or sell at this point.  This was a darling etf not long ago. Anyone holding or buying this?

[Deleted]

Value has done nothing this year so far. Growth is outpacing.

I am holding on to schd. Around year or so back I also moved some money into vanguard Windsor fund. I am considering what to do with it.

[Chahta]

I have held it a long time and will continue. Who knows what the next darling is.

[roi2020]

Why did you purchase SCHD in the first place?
Have there been any material changes (strategy, tracking index, costs, etc.) for SCHD?
Most mutual funds/ETFs will experience bouts of underperformance now and then.
It's usually not a good idea to chase performance and purchase "hot" funds.

[mattm]

Axe I’m in the same boat. I have trimmed my allocation to SCHD and considering trimming some more. It’s a tough decision.

I understand where roi2020 is coming from when he asks “why did you purchase….”. My only reply would be that the reason has not really changed for me, Income and TR in the value space. Although, one could argue if you purchased SCHD for income, have rates peaked and will they start going down? Does that diminish the reason for holding it?

Furthermore, it is performing so poorly that I have to question whether holding it for a 3.5% dividend is worth it. Not only is it significantly underperforming but it has a very high negative return.

I’m not an expert on income or etf’s but SCHD is highly rated by most people, organizations and “raters”. So I’m not sure chasing performance really applies in this case.

I’m keeping a close eye on SCHD and will give it a little more time, but as many in-the-know have said, don’t fall in love with any investment.

Just a thought and one man’s opinion.

Good luck and profitable investing!

[richardsok]

Why would it be a tough decision to lighten exposure to SCHD? It's just volatile enough to repeatedly give you hope, only to drop further. This ETF gave you clear MACD sell signals back in January when it was flirting with 80 and is now at 69 with no support in sight.

I wrote about this, guys. This is Tech Analysis 101. If a stock is too volatile to make sense of its chart, heed the SLOPE of its 20-day moving average or follow the two-line crossovers on its MACD. Try to pick facts over opinions & feelings.

Look, I understand liking the IDEA of a broad-based dividend fund as a big core holding IN THEORY. But if an investment is treating me like dirt, wouldn't I want to reduce my exposure? Maybe just own a small position to keep it always in front of me to watch?

[mattm]

richardsok, I generally agree with you, that's why I reduced my exposure and considering further reduction.  I guess I'm just a little slow in making those decisions.  I probably should have more conviction, make the change and as you said maintain a relatively small position to keep an eye on it.

SCHD is well below its 200-day MA; I have not check out the 20-day, why is the 20-day a better barometer?  Have I been using the wrong metric?

I am new to using MA and other indicators, so any feedback is greatly welcomed!!!

Matt

[richardsok]

May 12, 2023 13:52:52 GMT mattm said:

richardsok, I generally agree with you, that's why I reduced my exposure and considering further reduction.  I guess I'm just a little slow in making those decisions.  I probably should have more conviction, make the change and as you said maintain a relatively small position to keep an eye on it.

SCHD is well below its 200-day MA; I have not check out the 20-day, why is the 20-day a better barometer?  Have I been using the wrong metric?

I am new to using MA and other indicators, so any feedback is greatly welcomed!!!

Matt

The 200dma isn't the WRONG metric per se; it is merely a very slow indicator, especially when you use it with the 50dma crossover.   In my book, I discussed the 3dma x 15dma as good indicators for LOW volatility assets.

However, you might do very well to go to stockcharts.com --  set up their MACD indicator and heed the two-line MACD indicator as your buy/sell trigger.  You have much fewer trade signals than the Parabolic SAR (whch flips too often).   On a lot of websites the two-line MACD cross is hard to spot b/c they are shown so tiny, but stocksharts does a good job in presenting them very clear.

[mattm]

richardsok appreciate your insightful response!  I learned something today, so it's a good day, Thank you!

[anitya]

I think chang owns this in size. So, get his thoughts too. Below are my quick observations and take them FWIW -

It was (and may still be) overweight financials. Post SVB scare and its March reconstitution, one would have expected it to bounce back nicely. Its post March 15 chart indicates it made TR -1% while SPY made 6% (for a 7% difference) since then. Its performance started to diverge from other value funds too considerably since mid March.

It reconstitutes once a year and I think it rebalances once a quarter. If it rebalances once every quarter, at every rebalance, I am putting more money into the falling knifes, rather than kick out the losers or at least not overcommit until the next reconstitution. For ETFs not purely cap weighted index funds (like SPY, QQQ, etc.), I like them to reconstitute at least once a quarter but that is my personal preference.

Setting aside the discussions on investing for TR vs income, if one is interested in a value fund, then look for a value fund which might do better going forward.  My question is, is this a top 3 value fund for the next year?   Asking another way, what are the top 3 value funds for the next year or so?  

[yogibearbull]

Last Fall, I decided to add div-blend SCHD, but it was high. So, I bought the lagging broad market SCHB instead. Now that situation is reversed, and last week, I switched from SCHB to SCHD. For some strange reason, the debt-ceiling issue has caused growth to outperform value/cyclicals - but if something BAD happens, growth may not offer (any) protection. SCHD will eventually turn around.
stockcharts.com/h-perf/ui?s=SCHD&compare=SCHB&id=p74720715139

[anitya]

Value portfolios generally have high D/C ratios. Quality did alright this year but Quality factor in SCHD may not have been robust enough to compensate some of the hit on the Value aspect of SCHD because SCHD underperformed other Value portfolios.

During Friday after hours market, I sold some Growth and bought SCHD as an exchange into Value. If over the weekend I can come up with a better Value fund, I am likely to exchange out of SCHD on Monday. (I tend to trade first and then do the research.)

Any suggestions on other Value ETFs (as alternatives to SCHD) would be appreciated.

[yakers]

May 13, 2023 12:04:14 GMT yogibearbull said:

SCHD will eventually turn around.

I hope so, holding some in my taxable account, down in the time I have held it.

[bb2]

Probably not done suffering. Financials. Landing. Not enough tech. Bond competition.

[FD1000]

I never knew that SPY is a hot fund but YTD it's already ahead of SCHD by just a "little" margin of 17.6%.
If buying a lagging/value/undervalue/diversification funds was a great choice, you should own EM,SC,value for over 10 years now.

So, what about SCHD? I liked it for years. Now it sucks, no way to sugar coat it. You had to sell it earlier, the longer you hold, the harder it gets.  That's also true about trading in general. Why investors are so attached to their funds? Stop looking for why, a lagging fund just lags, it shouldn't concern you why.

At least find better fund within the category you "must"(why) own.  Just from memory, how about COWZ?

Wait, right now at 10:15...SPY 0.2%...SCHD 0.22%...I new hope. 

Attachments:

[chang]

May 11, 2023 19:53:20 GMT @axe said:

I find myself holding this non-performing ETF and I am trying to decide if I should continue to hold or sell at this point.  This was a darling etf not long ago. Anyone holding or buying this?

One of my biggest holdings. An absolutely “sleep easy” fund for me — no need, desire, or intention to sell.

Selling a fund every time you notice that it’s underperforming is a great way to always hold a portfolio of underperforming funds. The idea is to buy low and sell high, not to buy high and sell low.

The only thing worse than trading in and out of actively managed funds (where *maybe* there could be a management-related reason to do so) is to trade in and out of passively managed funds, where you’re always chasing old news.

[retiredat48]

@axe,@waffle2,Chahta,roi2020,mattm,richardsok,anitya,yogibearbull,yakers,bb2,FD1000,chang,

OK FD, I have a lunch wager. I bet you, starting today, that in the next 45 days, SCHD will do better (outperform) SPY (S$P500 proxy). Are we on?

R48

[FD1000]

Jun 6, 2023 15:36:06 GMT retiredat48 said:

@axe,@waffle2,Chahta,roi2020,mattm,richardsok,anitya,yogibearbull,yakers,bb2,FD1000,chang,

OK FD, I have a lunch wager. I bet you, starting today, that in the next 45 days, SCHD will do better (outperform) SPY (S$P500 proxy). Are we on?

R48

Only problem, I posted on 01/2023 that SCHD lags and several other funds lead. This means switch. I would do the bet that time, not after months were SCHD is 17+% behind.
It will take it months, maybe over a year to get it back, while SPY/VOO is the easiest index on the planet. Now it's the wrong time to switch. I also posted a couple of days ago that if you own QQQ, after 30+% run this year, it's time to sell some and/or to switch some to SPY. In order to switch to SCHD, we need to see a clear momo as we saw in 01/2022 when I posted that Value+higher divs show momo and it stayed that way for months.

[richardsok]

R48 & FD --

You both might have a point. Across the spectrum of the broad funds I watch, I'm starting to see early bits of strength in the non-tech former laggards. I wouldn't take that bet either -- certainly not now.

[FD1000]

Jun 6, 2023 21:51:33 GMT richardsok said:

R48 & FD --

You both might have a point. Across the spectrum of the broad funds I watch, I'm starting to see early bits of strength in the non-tech former laggards. I wouldn't take that bet either -- certainly not now.

Several points.
* If I have to make decision now, I already posted SPY over SCHD, until I see a clear momo for SCHD.
* If I want to invest in VALUE, I would look at DGRS, COWZ first. Looking at one month (schrts.co/UIPzgJiB) both look better than SCHD.  But wait, if I look at MY indicators, both funds signaled a buy on June 2nd.

[Norbert]

Jun 6, 2023 15:36:06 GMT retiredat48 said:

@axe,@waffle2,Chahta,roi2020,mattm,richardsok,anitya,yogibearbull,yakers,bb2,FD1000,chang,

OK FD, I have a lunch wager. I bet you, starting today, that in the next 45 days, SCHD will do better (outperform) SPY (S$P500 proxy). Are we on?

R48

SCHD is showing a bit of short-term strength and may have bottomed. But, SPY technicals are stronger in most categories, plus it's outperforming.

If forced to choose today, would run with SPY.

[Chahta]

Looks like SCHD has moved sideways for 2 years. After a 2022 decline it recovered in 2023 then declined, in its normal pattern for 2 years. After reinvesting it sits about where it was 2 years ago. Not great but not horrible (-6%). It signaled a 3-line break up yesterday. DGRS has fared much worse (-11%). DGRS signaled a 3-line break as well. SPY is even for the last 2 years.

[mnfish]

Sep 23, 2022    Post by mnfish on Sep 23, 2022 at 2:37pm
Bought a good amount of SCHD @ $67.36 across 4 accts. Cash now at 8.1%


I agree with Chata and Yogi that it will recover in time.

[chang]

I'm not sure what the fuss is about. 3YR chart of SCHD-VIG-SPY shown below. SCHD seems, interestingly enough, to be the most volatile of the 3. Still, all have done well. SCHD shows a pronounced recent downturn. I'm with retiredat48 on this: this looks like a classic reversion-to-the-mean scenario. I'd bet on SCHD beating the other two over the next 12 months. More to the point, I don't see anything to lose sleep over here. I might add to SCHD.

(Click to expand.)

[Deleted]

Thanks for the insight. I've held past the point of selling consideration. If I didn't own it I'd probably buy as Chang suggests.

[anitya]

(I am yet to catch up on the activity in this forum over the past two days but I share as I discover new information - any duplication or antagonistic information in my posts is not intended.  I try to read uncleharley posts at least once a day even if I do not get a chance to read the entire forum.)

SCHD, which I own, has done very well until the mini banking crisis of 2023. I added SCHD twice in 2023 and immediately sold and reminded myself "do not keep trying what is not working." I do not have any plans to sell any SCHD I already bought prior to 2022.

I have to re-educate myself about what subsectors the fund specifically excludes (REITs?) but it is difficult for me to ignore collateral effects on banks.

I received the following today -

Interest-only loans as a % of new commercial mortgage-backed securities...
2010: 17%
2013: 51%
2016: 65%
2019: 84%
2021: 88%

An estimated $1.5 trillion in commercial mortgage loans are coming due over the next 3 years.

It is not just office buildings that get effected but also other businesses that thrive (or not) because of office buildings.

Office CMBS spreads continue to widen, now over 1,100 bps for BBBs, pricing in much higher default rate.

I think somebody had reported here a few months (weeks?) ago about Blackstone and PIMCO defaulting on some properties.  


Fortunately (or unfortunately), unlike unprofitable tech sector, RE moves slower. 

[mnfish]

SPY top ten stocks are 29.8% of holdings. So $10k in SPY = $2,980 in top ten stocks.

Top ten have a 57.4% gain YTD or a $1,710 gain YTD on $2,980.

$10k in SPY YTD has a 12% gain for $1,200

So, the other 490 stocks have produced a $510 loss YTD.

Ticker     Weight         YTD
AAPL     7.387671       42.00%
MSFT     6.724299       35.00%
AMZN     3.019087      41.00%
NVDA     2.575225      163.00%
GOOGL   2.038120     37.00%
GOOG     1.783118     37.00%
BRK.B     1.688820     8.00%
TSLA     1.687843       107.00%
META     1.639605     111.00%
UNH     1.258898        -7.00%

            29.802686      57.40%

[anitya]

richardsok , uncleharley , yogibearbull,

It is likely a slow day toady and I was hoping you would not mind my bothering you.

2022 was a good year for Value equities.

Growth equity has had a great 13-14 years, except for 2022.

Looking at VTV:SPY over the past 20 years, the weekly chart is consistently below the 200 MA, except for a couple of years. So, I was wondering if there is any benefit to allocating now to Value equity as a long term hold vs just putting money into SPY (blend) if I do not want to allocate more to QQQ (growth per se)?

Could you please opine if we are back to the pre-2022 trend in Growth over Value or are you anticipating a regime shift to Value?

[uncleharley]

The weekly and daily charts for SCHD look like it is stuck in a trading range that it can't get out of. I do not anticipate a regime change to value nor do i think we are back to a pre 2022 growth trend. If I were to vote on one or the other I would vote for growth.

[retiredat48]

Jun 7, 2023 16:01:30 GMT @axe said:

Thanks for the insight. I've held past the point of selling consideration. If I didn't own it I'd probably buy as Chang suggests.

@axe,...Hi

Interesting to me is a fund that is value themed but a touch of growth in the holdings, such as Vanguards Divy Growth Fund, VIG.  VIG is slowly moving to new recent-chart highs, and better gains than SCHD.

My gut tells me that, since SCHD is primarily a high dividend themed fund, that the competition from Money Market Funds, treasuries of all durations, and short term corp bond funds, each with yields above 4%, causes investors to say: "Why go to SCHD now, when I can get risk-free, the same or slightly better return."  A real headwind.

Of course, if rates fall (maybe 6 months from now), or whenever, there may be a strong rush to high divy stocks...and SCHD goes up nicely.

Disclosure: I own both.

R48