Schwab U.S. Dividend ETF's 0.06% Fee Masks Costly Portfolio Turnover

The Schwab U.S. Dividend Equity ETF (SCHD) charges a 0.06% expense ratio, but its annual portfolio reshuffle can result in significant turnover, including the sale of top holdings like Cisco Systems. This can lead to a hidden tax on investors, particularly if they hold the fund for an extended period. In March 2026, the fund sold two top-10 holdings, including Cisco, which has since risen 47.49% year-to-date and 68.85% over the past year. The fund's mechanical screening process ignores factors like tax implications and company guidance, resulting in a hidden tax for investors.