SCHD's Low Fee Masks Costly Portfolio Reshuffle

The Schwab U.S. Dividend Equity ETF (SCHD) charges a low fee of 0.06%, but investors may want to reconsider their holdings due to a costly portfolio reshuffle in March 2026. During this period, the fund sold about 31% of its holdings, including top-10 stocks like Cisco Systems, just before those stocks surged.

This forced sale triggered capital gains taxes for investors and caused exposure drift away from high-performing stocks. While SCHD returned 27.66% over the past year, investors missed out on gains from key stocks removed during the reconstitution.