I've traditionally been a VOO investor, but thinking of moving a large portions of my investments into SCHD. Reasoning is in a potential market downturn, i'd rather be in cash flow postive companies, then even voo where its dominated by ai dependent faang companies.
So in a theoritical drop of sp500 of 50%, a schd may only drop 35-40% in theory. I still want to be in equities, but essentially moving to value driven equities. what do you think of this thought process?
ETF allocation changes due to high valuations
byu/Parking-Banana-212 ininvesting
Posted by Parking-Banana-212
3 Comments
Why not AVUV instead
if you look at the Portfolio Backtester site, you can see what happened in 2022 (as a stress test) and over a longer time. SCHD indeed behaved pretty well in 2022, but VOO may do better overall. consider something like 80 SCHD 20 SPMO, which dials back the IT while maintaining a good return.
it’s worth spending some time to test different allocations at Portfolio Backtester. just remember this reflects the past and not the future. still, it’s helpful to see how investments held up in 2022.
Has anything changed about your time horizon or how much of a drawdown you can tolerate, or is the move to SCHD entirely based on expecting it to hold up better in the next downturn?