SCHD ETF Hits Record High as Inflows Rise While Tech Stocks and Treasury Yields Slip
The Schwab U.S. Dividend Equity ETF (NYSE:SCHD) extended its comeback, rising to a record high of $35.45 as technology stocks tumbled and Treasury yields kept falling. The fund has now returned 30% year-to-date on a total-return basis. By comparison, the Vanguard S&P 500 ETF (NYSE:VOO) and the Invesco QQQ Trust (NASDAQ:QQQ) have returned 13.2% and 16.5%, respectively.
SCHD ETF Price and Inflows are Rising
The Schwab U.S. Dividend Equity ETF continued rising and reached a record high. It crossed the previous all-time high of $35.30, even as the broader stock market dropped. The tech-heavy Nasdaq 100 dropped by over 700 points, while the S&P 500 Index fell by over 100 points.
The rally has coincided with rising inflows. ETF Db data shows that the fund has added over $24.5 billion this year, making it one of the best-performing funds in the market. As a result, its assets have jumped to $116 billion, making it the biggest dividend ETF in the world.
SCHD’s surge reflects its limited exposure to the technology and artificial intelligence sectors. According to Schwab’s website, consumer staples, health care, and energy companies make up the largest share of the fund, accounting for 54.5% of its holdings.
Its top companies are firms like Texas Instruments, Chevron, Procter & Gamble, and ConocoPhillips. As such, SCHD is seen as a good hedge against the AI sector, which some analysts believe that it is a bubble that may burst soon. In a statement on Wednesday, Ken Griffin compared the AI boom to the dot-com bubble of the late 90s.
The SCHD ETF is also rising as U.S. bond yields continue falling. The ten-year yield dropped to 4.96%, its lowest level since September 23rd. In theory, dividend ETFs do well when bond yields are falling because their yield becomes attractive, while lower discount rates support valuations.
Technicals Suggest SCHD ETF Has More Upside
The daily chart shows that the SCHD ETF has done well in the past few days, moving from a low of $32.37 on October 5 to $35 today. It has moved above the key resistance level of $35.30, its highest point on August 24. Moving above that level has invalidated the double-top pattern.
The Average Directional Index (ADX) has jumped to 31, a sign that the upward trend is gaining momentum. It remains above the 50-day and 100-day moving averages. Therefore, these technicals suggest that the fund may continue rising as bulls target the psychological level of $40.
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