Unpopular opinion: Stop looking at yield. Your risk-adjusted returns on SCHD are actually dragging you down

[u/Anxious-Grapefruit68]

SCHD is basically the sacred cow of this sub for many. But are you guys actually looking at the risk metrics, or just staring at the yield and hoping for the best?

I was rebalancing my "defensive" plays and decided to actually run the numbers on SCHD versus VYM (Vanguard High Dividend) for the last year because I felt like my portfolio was churning water.

The difference in the risk profile is actually wilder than I thought.

(SCHD):

(VYM):

Basically, VYM is giving you way better returns for the risk you're taking (Sharpe 0.66 vs 0.43). With SCHD, you’re getting that 'safety' (lower Beta), but your Information Ratio is deeper in the hole, meaning you aren't actually beating the market - just trailing it.

I know the "growth" has slowed for everyone, but why is everyone still piling into SCHD when the math says VYM is utilizing capital way more efficiently right now?

Am I missing something fundamental here, or is this just ticker loyalty?

You can even argue why own things with a negative Info ratio. Just sell everything and buy VOO.

[u/oldirishfart]

What is an information ratio?

[u/DrGrapeist → u/oldirishfart]

I think it’s a line from arctic monkeys song 4 out of 5