SCHD Index Fund Equivalent In The UK

SCHD is a popular Index fund in the dividend-investing community. It tracks the Dow Jones U.S. Dividend 100 Index which contains approximately 100 of the best dividend stocks in the US.

Unfortunately, if you live in the UK, you won’t be able to access this ETF as it’s not available. In this article, we are going to take a look at the best alternatives to get similar exposure in the UK.

Quick Overview
SCHD aims to track the Dow Jones U.S. Dividend 100 Index. Due to regulatory reasons, this ETF is not available in the UK. A similar ETF with the same aim in the UK is the WisdomTree US Equity Income UCITS ETF.

Why Is SCHD Not Available In The UK?

Before we take a look at the alternative to SCHD, let’s look at why SCHD is not available in the UK.

Funds in the UK & Europe need to abide by a regulatory framework called UCITS (Undertakings for Collective Investment in Transferable Securities). This is a European Union regulation.

When you look at many ETFs in the UK you will see UCITS in the name.

US funds do not have to follow these same regulatory requirements and therefore don’t meet the regulations. This is why they are unavailable in UK markets.

For most funds, there is a UK or EU equivalent fund you can invest in. While it may not be under the exact same name, it has the same goal as its US counterpart.

What Is SCHD?

The Schwab U.S. Dividend Equity ETF (SCHD) is an exchange-traded fund managed by Charles Schwab Investment Management. SCHD aims to track the performance of high dividend yielding U.S. stocks, offering investors a combination of equity appreciation and income generation.

Key aspects and aims of SCHD include:

• Income Focus: SCHD is designed to provide exposure to U.S. companies with a track record of consistently paying dividends. As a result, the ETF can offer an attractive yield to income-seeking investors.
• Stock Selection: The ETF tracks the Dow Jones U.S. Dividend 100 Index, which includes 100 high dividend yielding U.S. stocks that have been screened for financial health and stability.
• Diversification: SCHD holds a diversified selection of companies across various sectors, though the weightage might be skewed towards sectors traditionally known for higher dividends like consumer staples, utilities, and financials.
• Low-Cost Investing: Charles Schwab is known for offering low-cost ETFs, and SCHD falls in line with this philosophy, making it an appealing option for cost-conscious investors.
• Passive Management: As SCHD seeks to replicate the performance of the underlying index (Dow Jones U.S. Dividend 100 Index), it uses a passive investment approach.
• Combination of Growth and Income: While the primary focus is on dividend income, the ETF also provides potential for capital appreciation given its equity holdings.

Investors often choose SCHD to enhance the income generation potential of their portfolios, especially if they are in search of steady dividends from U.S. companies. It can be a suitable choice for retirees or any other investors prioritizing income, but as with all investments, it comes with risks. Always conduct thorough research or consult with a financial advisor before making investment decisions.

SCHD Alternatives In The UK

Now we know what SCHD and it’s aim is, we can take a look at a similar fund in the UK. Unfortunately there is no fund that tracks the exact same index as SCHD but there are some that have the same aims.

WisdomTree US Equity Income UCITS ETF (DHS)

Management Fee: 0.29%

The WisdomTree US Equity Income UCITS ETF seeks to track the price and yield performance, before fees and expenses of the WisdomTree US Equity Income UCITS Index.

• Gain broad diversified exposure to US high dividend yield equities which meet WisdomTree’s ESG (environmental, social and governance) criteria
• Benefit from risk-screening to exclude companies based on quality and momentum proprietary scores
• Use to complement or replace large cap value and dividend oriented active and passive strategies
• Use to satisfy a portfolio requirement for above average income generation
• The ETF is physically backed and UCITS compliant

You may also be interested in our article on the Best Index Funds For UK Investors

Where Can You Buy These Funds?

Many popular brokerages will offer this fund. If your current broker does not offer it you can use Hargreaves Lansdown. They have over 3.000 funds available on their platform including the WisdomTree US Equity Income UCITS ETF.

If you want a full review on HL you can check out our full review here.

Most Trustworthy Platform

Hargreaves Lansdown | ISAs, pensions, funds and shares

4.5

Hargreaves Lansdown is one of the most trusted investment platforms in the UK. They offer amazing customer service with access to someone on the phone at any time. However, these come at a high price in terms of fees.

Pros:

• Amazing customer service
• Reliable trustworthy brand name

Cons:

• High fees on stock trading & ETFs
• Less Modern interface than competitors

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Final Thoughts

If you are looking for a similar fund to SCHD in the UK, the WisdomTree US Equity Income UCITS ETF is a viable option.

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