VOO vs. SCHD: Which Is the Smarter Buy When Inflation Is Running Hot?
The Vanguard S&P 500 ETF's heavy tech concentration could become a liability in an extended high-inflation environment.
VOO vs. SCHD: Which Is the Smarter Buy When Inflation Is Running Hot?
Overview
U.S. headline inflation hit 4.2% in May, the highest reading since April 2023, with energy costs up 23.5% year over year.
Even though corporate earnings growth is strong and the labor market is demonstrating resilience, rising inflation changes some of the dynamics of where to put new money to work.
The Vanguard S&P 500 ETF (NYSEMKT: VOO) and the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) perform very differently in bull market rallies. The S&P 500's mega-cap tech concentration tends to do better than more diversified strategies. But the Schwab ETF's focus on high-quality, durable dividend payers has helped it deliver annual dividend growth far above historical inflation rates.
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Originally published at www.fool.com.
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