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SCHX Vs. SPY: What The Divergence Tells Us


  • Large-cap index funds such as Schwab U.S. Large-Cap ETF (SCHX) and SPDR S&P 500 Trust ETF (SPY) are largely interchangeable for most purposes.
  • Their performance and volatilities have been historically almost identical with a few exceptions, and now is such an exception.
  • During recent corrections, SCHX suffered a 20.24% loss off its peak, about 1.05% more than SPY.
  • This article will contextualize this seemingly small 1.05% divergence, detail its implications, and suggests a few actionable ideas.
  • Looking for a helping hand in the market? Members of Envision Early Retirement get exclusive ideas and guidance to navigate any climate. Learn More »

Large Cap Stock Market Big Businesses 3d Illustration



The Schwab U.S. Large-Cap ETF (NYSEARCA:SCHX) and SPDR S&P 500 Trust ETF (NYSEARCA:SPY) are two of the most popular index funds in the large-cap space. They are identical in many ways, as to be elaborated on

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This article was written by

Sensor Unlimited profile picture

Sensor Unlimited is an economist by training with a PhD, with a focus on financial economics. She is a quantitative modeler and for the past decade she has been covering the mortgage market, commercial market, and the banking industry. She writes about asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets.

Sensor Unlimited contributes to the investing group Envision Early Retirement which is led by Sensor Unlimited. They offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request. Learn More.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

Fluffy Guy profile picture
Looks to me like we should be buying small and mid caps.. I have been adding to VO, VB, VBR, AVUV..
schizoidmantoo profile picture
One thing that holding 750 stocks over the 500 is that the percentage held by the top ten holdings is also smaller. The top ten stocks are the same in both funds but in SPY they make up 23.67% of the fund. In SPHX they make up 20.7%. of the fund. 11.02% of Spy is APPL and MSFT. They are 10.2% of SCHX. Personally, I do not like the idea of having such a high percentage of my portfolio in just 2 stocks. 10.2% is too much, but 11.02% is worse.
Is the market correcting? Next week will tell the story.
What are the sectors to monitor? Will consumers lead the way or industrial activity?
The expression "Rearranging the deck chairs on the Titanic" comes to mind.
Skip_Town profile picture
In the current environment, another positive of SCHX's mid-cap component is what I'd assume is its possible mitigation of the negative effects US$ strength has been having on the bigger guys' bottom lines.
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