SCHB and SPTM Compared: Divergent Index Coverage and Performance

Schwab U.S. Broad Market ETF (SCHB) and State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) offer investors low-cost exposure to the U.S. equity market, but they differ significantly in the breadth of their underlying indexes and recent performance trajectories. Both funds charge an identical 0.03% expense ratio, yet they track distinct benchmarks that result in varying numbers of holdings and sector concentrations.

SCHB tracks the Dow Jones U.S. Broad Stock Market Index, which includes 2,394 positions. This broader mandate provides exposure to a wider range of companies, including the smallest market capitalizations, compared to its competitor. The fund’s largest positions are Nvidia at 7%, Apple at 6.7%, and Microsoft at 5.4%. Sector allocation is led by technology at 35.8%, followed by financial services at 12% and healthcare at 9.4%. Launched in 2009, SCHB has paid $0.31 per share over the trailing 12 months, resulting in a yield of approximately 1.1% based on its recent share price of about $29.6.

In contrast, SPTM tracks the S&P Composite 1500 Index, which represents roughly 90% of the investable U.S. equity universe. The fund holds 1,510 stocks, meaning it excludes approximately 500 of the smallest companies by market cap that are included in SCHB’s index. SPTM’s top holdings are Nvidia at 7.3%, Apple at 6.93%, and Microsoft at 5.56%. Its sector mix features technology at 36.5%, financial services at 12%, and industrials at 10.4%. Having launched in 2000, the fund paid $0.98 per share over the trailing 12 months, translating to a yield of about 1% on its recent share price of approximately $93.2.

The difference in index composition affects portfolio concentration. Because SPTM tracks a smaller universe of companies, its top 10 holdings account for 36.05% of the fund. This higher concentration in SPTM is likely a factor in its recent performance; SPTM has slightly outperformed SCHB over the last one and five years and experienced a shallower maximum drawdown. This outperformance is attributed to SPTM’s slightly higher weighting in technology names, which have driven market returns in recent years.

For investors constructing a diversified portfolio, the choice between the two funds may depend on existing holdings. If an investor already owns an ETF tracking the S&P 500 or Nasdaq-100 indexes, adding either broad-market fund could result in overlapping exposure to the largest U.S. companies. While both funds serve as core holdings for long-term investors seeking diversification across large-, mid-, and small-cap stocks, the specific index target determines whether an investor prioritizes maximum breadth with SCHB or a slightly more concentrated approach with SPTM.