Yes, but "more suitable" would imply that you want a result different from the market, so you would still compare your results to other alternatives that could be even more suitable. My only point was that however we deviate from the market we're doing that with some better relative outperformance (lower volatility, higher returns, something) in mind, so results relative to that objective do matter. That's a valid point and I didn't intend to equate the S&P500 to "the market" or even the entire U.S. It is not as much about beating the market as selecting a fund more suitable for one’s portfolio if it is suitable, then the alternatives and even general market do not matter. But again, being that I'm not forced to make that bet, I definitely would prefer an investment like VT or VOO or SCHD. If I were forced to choose to make a bet (I'm not, so I prefer global market at cap weight), I would actually be more comfortable with SCHD over VOO, given the quality screens involved and the significant value loading. Although both are great investments in my opinion, both are bets on a segment of the broad market (the broad market being global equities at market cap weight). Even in the comments above, the S&P 500 has been mentioned a few times already. (Sharpe, Sortino) are lower for VYM than VFINX.
I agree with you fully, but I disagree on the S&P 500 being "the market." So when I hear the forum saying, "you shouldn't invest in SCHD, you should invest in the S&P 500 instead," I see a contradiction. Other ETFs pay higher Dividends but are not as well diversified. Once you get into the trying-to-beat-the-market in some respect game, why wouldn't it matter whether your fund outperforms the alternatives you could have utilized, and the market as a whole? As Bogle says: buy right, and hold tight.īy selecting SCHD, someone is by definition trying for a different performance (higher returns, less volatility, something) than the market. There will always be other assets doing better than yours. What does it matter that any other fund does better than SCHD or not? That should have no say in whether or not OP can reach his financial goals.
Or whether performance to this point has been more coincidental, and reflective of its relatively higher concentration in a smaller number of equities than some similar funds. Still the issue is whether the factor combination in SCHD will prove superior over long periods (decades) to, for example, VYM or any number of actively managed funds with the same objective. So these companies are currently out of favor in the market and thus are at reasonable valuation metrics. SCHD invests in big companies but more value oriented investments relative to Big tech mega cap growth which is up huge YTD.
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