This dividend ETF has outperformed many actively managed funds over a decade

When looking for easy ways to add diversification to a portfolio, one of the smartest moves you can make is to plunge into the world of exchange-traded funds or ETFs – those wonderful funds that hold a basket of stocks and trade like normal equities.

ETFs come in all sizes and flavors. You can get an ETF that tracks an entire index, or you can get something more specific, like a thematic ETF that covers a specific sector. Some funds are specifically for income-seeking investors Invest in stocks with strong dividend yields.

While index ETFs are passively managed, meaning their goal is to duplicate the performance of the underlying index, you can also find actively managed ETFs, in which experts can choose which stocks will be in the fund and at what weighting to outperform the market.

Actively managed funds come with a cost – they tend to have higher expense ratios than passively managed ETFs. Common sense would dictate that the returns from these funds should be higher than the additional expenses incurred by investors. But if you look hard enough, you can find some passively managed ETFs, such as Schwab US Dividend Equity ETF (SCHD 1.23%)Which perform very well and have outperformed many popular actively managed funds over the last decade.

Schwab US Dividend Equity ETF

today’s change

(-1.23%) $-0.38

current price

$30.56

key data points

day limit

$30.50 -$30.97

52wk range

$24.76 -$31.95

volume

20 meters

What’s in the SCHD ETF?

Schwab US Dividend Equity ETF tracks the Dow Jones US Dividend 100 IndexWhich includes 100 US-based companies with continuous dividend payments for at least 10 years. It provides investors with exposure to a variety of sectors, with consumer staples having the largest exposure.

And the stocks in this ETF represent some of the most recognized companies in the world. The top 10 holdings represent 40% of the ETF’s total weight.

Source: Schwab Asset Management (weights as of April 8, 2026).

There is one in the fund expense ratio Just 0.06%, or $6 annually, for every $10,000 invested. And its dividend yield of 3.4% is much higher than its yield of 1.1% S&P 500.

How does the SCHD ETF match up with an actively managed portfolio?

Dividend yield is the secret of this ETF, helping it generate 223% returns over the last 10 years. In other words, a $10,000 investment a decade ago would now be worth $32,300.

And that return is even better when you compare it to the returns of some popular actively managed ETFs like Pimco Active Bond Exchange-Traded Fund (deeply concerned 0.11%)Which gave returns of only 32% in the last decade with an expense ratio of 0.54% iShares Short Duration Bond Active ETF (near 0.02%)With a total return of 34% and expense ratio of 0.25% and State Street SPDR DoubleLine Total Return Tactical ETF (TOTL 0.13%)Which has returns less than 20% and expense ratio of 0.55%

SCHD Total Return Level by data YCharts.

The SCHD ETF demonstrates that active management does not always deliver superior returns, making this passively managed dividend ETF a worthy choice for any portfolio.