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Whereas I have been very happy with the performance of FDSAX, I believe their 1.06 ER is too high and looking for a cheaper dividend fund replacement. I am considering an EFT of SDOG with an ER of .40 which I can get commission free at Schwab. Thoughts or other options? Thanks.
When someone asks for an alternative fund, it's hard to answer without knowing what there was about the original fund that appealed to the investor.
FDSAX is a somewhat quantitative (rule based), highly concentrated, high dividend, large cap value fund. Depending on which attributes one is trying to preserve, one can come up with various different alternatives.
SDOG is likely the closest match in the sense of these attributes. Like FDSAX it is rule based, in fact using a variant of one of FDSAX's rules (highest yielding stocks, or "dogs"; FDSAX using 10 DJIA dogs, SDOG using 5 dogs in each of ten S&P sectors). Unlike FDSAX its rules stop there, while FDSAX fleshes out its portfolio with quant-selected stocks.
Both funds are highly concentrated, high dividend, large cap value.
SCHD seems to come the closest to FDSAX in terms of stock selection. It tracks a rules-based index that gives it some of the flavor of the "fleshing out" portion of FDSAX's portfolio. However, its rules seem to be a mix of high dividend (which tend to lean toward value) and dividend growth/appreciation (which tend to lean toward blend). The result is a portfolio that is still value oriented, but closer to blend. And more diversified (about 100 stocks vs. 35).
Morningstar considers VIG the closest ETF to SCHD. VIG is a dividend appreciation fund. As is typical of funds with this objective, it falls into the blend category and has a somewhat lower yield. If one looks at gross yield, before subtracting ERs, SCHD, and VIG have yields near 3%. vs. FDSAX which is closer to 3.5%. Going the other way, for pure yield (with fewer rules than FDSAX) one has SDOG with gross yield around 4%.
I might have suggested VYM. It is focused on high dividends as opposed to dividend appreciation. But it goes all the way down to 50th percentile on stock yields. This leaves it with just a tad higher gross yield (3 1/4%) than the div appreciation funds, still value-oriented but highly diversified (over 400 securities). It has an even simpler rule-based system than the others - perhaps better transparency but basically a vanilla US index fund with bonus points for yield.
I have looked at the etf SDOG in the past but chose to stick with FDSAX. I am thinking, both are indeed great investment choices and one can not go wrong owning either one them if they meet meet an investor's investment profile.
Thank you for the all replies. Yes I am a fan of the Dogs of Dows concept which is one of things that attracted me to FDSAX in the first place. Paying over 1% for a fund with a rules concept just seems too much to me. I love the SCHD's ER but don't really like the market weight (100 stocks but 45% in the top 10), but I do own it in another one of my 4 Schwab accounts. I prefer the equal weight of SDOG or NOBL, albeit a higher ER. Unfortunately OUSA is not available at Schwab - commission free, and this is a 401K account so I will adding to it and would like it to be commission free. I am going to stick with SDOG for now, but may consider adding NOBL in the future as I continue to convert my active Large Caps into lower cost ETFs.
If you like broader weighting (not a dividend play per se), I am finding it interesting to track RPG and RPV and how 50-50 they generally outperform RSP. Just something to keep in mind perhaps. You might like to track CAPE as well.
Interesting find on 50/50 of RPG/RPV out performing RPS but I suspect that they might be temporary and the next 5 or 10 years could be different. CAPE is a good find as welI, I don't own it but I do own DSEEX and am very happy with that fund. I also do like SPHD, the results so far have been excellent. I just wish it was Schwab ETF One-Source.
Comments
Regards,
Ted
A Dividend ETF That’s Giving Our Longtime Favorites A Run for Their Money:
http://news.morningstar.com/articlenet/article.aspx?id=759468
When someone asks for an alternative fund, it's hard to answer without knowing what there was about the original fund that appealed to the investor.
FDSAX is a somewhat quantitative (rule based), highly concentrated, high dividend, large cap value fund. Depending on which attributes one is trying to preserve, one can come up with various different alternatives.
SDOG is likely the closest match in the sense of these attributes. Like FDSAX it is rule based, in fact using a variant of one of FDSAX's rules (highest yielding stocks, or "dogs"; FDSAX using 10 DJIA dogs, SDOG using 5 dogs in each of ten S&P sectors). Unlike FDSAX its rules stop there, while FDSAX fleshes out its portfolio with quant-selected stocks.
Both funds are highly concentrated, high dividend, large cap value.
SCHD seems to come the closest to FDSAX in terms of stock selection. It tracks a rules-based index that gives it some of the flavor of the "fleshing out" portion of FDSAX's portfolio. However, its rules seem to be a mix of high dividend (which tend to lean toward value) and dividend growth/appreciation (which tend to lean toward blend). The result is a portfolio that is still value oriented, but closer to blend. And more diversified (about 100 stocks vs. 35).
Morningstar considers VIG the closest ETF to SCHD. VIG is a dividend appreciation fund. As is typical of funds with this objective, it falls into the blend category and has a somewhat lower yield. If one looks at gross yield, before subtracting ERs, SCHD, and VIG have yields near 3%. vs. FDSAX which is closer to 3.5%. Going the other way, for pure yield (with fewer rules than FDSAX) one has SDOG with gross yield around 4%.
I might have suggested VYM. It is focused on high dividends as opposed to dividend appreciation. But it goes all the way down to 50th percentile on stock yields. This leaves it with just a tad higher gross yield (3 1/4%) than the div appreciation funds, still value-oriented but highly diversified (over 400 securities). It has an even simpler rule-based system than the others - perhaps better transparency but basically a vanilla US index fund with bonus points for yield.