Its no secret that a fan favorite ETF in SCHD has underperformed the stock market. The overall SPY is up 16.89% Year to Date. The stock market has been on a tear. This has been on the heels of not as bad as expected earnings data, an interest pause and big tech carrying the market.  But why is SCHD such an under performer this year? Lets find out.

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To answer this question we have to understand the components of these two ETF’s. SCHD is a top tier dividend growth ETF holding 104 companies as of this writing. This ETF also has a dividend yield of 3.59%. These 104 companies are distributed among consistent dividend payers that have a track record of dividend growth and price appreciation. Portfolio distributions are most concentrated in Industrials, health care, financials, consumer staples and information technology.

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The SPY is a top tier ETF consisting of 500 of the largest companies in the United States. The fund aims to hold the largest companies by market cap  and rebalances as companies grow. If companies are larger than 4.5% then it readjust them quarterly. This helps the ETF not be too overweight in one particular company. Much Like SCHD, The SPY has a wide diversification throughout the sectors however it holds a significantly higher portion in information technology.