■ ETF · August 19, 2026
SCHD Outperforms Nasdaq in 2025 as Value Rotation Drives Gains
The Schwab U.S. Dividend Equity ETF (SCHD) returned 27% YTD, beating the Nasdaq 100's 19%, as value stocks outperformed growth.
Performance and Market Context
The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) has returned 27% year-to-date and 30% over the past year, surpassing the Nasdaq 100's 19% YTD and 26% one-year gains. This outperformance marks a reversal from recent years when growth stocks led. The shift reflects a broader market rotation: investors have moved away from high-valuation AI-focused megacaps toward companies with strong free cash flow and conservative payout policies, which align with SCHD's investment criteria.
Portfolio Changes and Sector Weights
SCHD's portfolio underwent significant changes during its March reconstitution. The fund's top holdings now include Qualcomm (NASDAQ:QCOM) and Texas Instruments (NASDAQ:TXN), each representing roughly 7% and 6% of assets, respectively, surpassing UnitedHealth (NYSE:UNH). These semiconductor companies have benefited from the chip sector's rally without the high valuations of growth-oriented tech names. As of May, SCHD's net assets reached approximately $95 billion, with inflows following the strong performance.
Sector allocations highlight the fund's value tilt: healthcare at about 18%, energy at 14%, consumer staples at 13%, and technology at 13%. This composition is designed for environments where investors prioritize dividends over growth potential.
Reconstitution vs. Rotation
The fund's gains stem from both the macro rotation and the March rebalance. Value stocks were already outperforming growth before the reconstitution, and SCHD's previous portfolio would have captured some of that. However, the rebalance added incremental returns by increasing exposure to semiconductor payers. The primary driver, though, is the market's reduced appetite for growth stocks, not the index committee's actions.
For new investors, this distinction matters. Buying SCHD after a 27% run means accepting a lower forward yield than earlier buyers received. The trailing twelve-month distribution is $1.05 per share, paid quarterly, and dividends are qualified, offering tax efficiency in taxable accounts.
What it means for income investors
SCHD remains a core holding for those seeking qualified dividend income from companies with real earnings, at a low expense ratio. However, the current entry price reflects a rotation that has largely played out, so the fund's future returns may be more modest. Investors should focus on its long-term role rather than recent performance.
Reporting based on: 24/7 Wall St.. Figures verified against market data where available.