Energy Stocks Comprise 17% of This Top Dividend ETF. Here's Why.
The Schwab U.S. Dividend Equity ETF features sizable energy exposure, but that's not cause for alarm.
Overview
Investors evaluating passive exchange-traded funds (ETFs) can save themselves from headaches and negative surprises by taking just a few minutes to understand how an ETF's underlying index works.
That's especially true with dividend ETFs, including the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). A $96 billion behemoth, this ETF is the second-largest fund in its category and allocates 16.9% of its portfolio to energy stocks. The Schwab ETF's energy exposure is high compared to some competing ETFs and more than 5x the weight assigned to that sector by the S&P 500.
This ETF has significant energy exposure, but that's working for investors this year. Image source: Getty Images.
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Originally published at www.fool.com.