SCHY vs. IDVO: Navigating Risk and Reward for Retirement Income

In the quest for steady monthly income during retirement, investors often face a critical trade-off: prioritize capital preservation or dividend yield. Two popular ETFs, the Schwab International Dividend ETF (SCHY) and the Amplify International Dividend Opportunities ETF (IDVO), embody this tension. While both target dividend-focused international equities, their risk profiles, structures, and volatility metrics diverge sharply. For retirees seeking to balance income with stability, SCHY's disciplined risk management and lower volatility make it a safer choice—despite IDVO's marginally higher dividend yield.

The Risk Equation: Why Lower Volatility Matters

First, let's dissect the risk metrics that define these funds.

• Sharpe Ratio: SCHY's 1.57 outperforms IDVO's 1.05, meaning it generates more return per unit of risk.
• Sortino Ratio (measuring downside risk): SCHY's 2.21 vs. IDVO's 1.54 signals better protection during downturns.
• Ulcer Index: SCHY's 5.39% may seem higher than IDVO's 3.19%, but this metric reflects price volatility over time—SCHY's broader fluctuations are less frequent and less extreme in recent years.

The daily standard deviation underscores this: SCHY's 13.59% volatility is 25% lower than IDVO's 18.15%, reducing the emotional and financial stress of large swings. For retirees, this predictability is critical.

Yield vs. Risk: A Delicate Trade-Off

IDVO's 5.55% dividend yield (vs. SCHY's 3.85%) is enticing, but it comes at a cost. Active management strategies, which IDVO employs, often require higher fees (0.65% expense ratio vs. SCHY's 0.14%) and may amplify exposure to volatile sectors. Over time, the compounding drag of fees can erode returns.

Moreover, SCHY's YTD 2025 performance (21.23%) outpaces IDVO's 18.34%, demonstrating that capital growth and income can coexist without excessive risk. Retirees relying on monthly withdrawals need not chase yield if the fund's total return—including dividends—remains robust.

Fund Structures: Passive Discipline vs. Active Gambles

• SCHY tracks the Dow Jones International Dividend 100 Index, a passive approach that minimizes turnover and focuses on stable, high-dividend international firms. Its holdings span 100+ companies in sectors like utilities and financial services, with 83% allocated to developed markets, reducing emerging-market risks.
• IDVO, managed actively by Amplify, likely employs strategies to enhance yield, such as leveraging or sector bets. While this can boost dividends, it also introduces concentration risk and higher volatility.

The max drawdown metric tells the story: IDVO's -15.45% peak loss is less severe than SCHY's -24.03%, but SCHY's current drawdown hovers near 0%, indicating resilience in 2025. Retirees withdrawing funds during a deep drawdown risk depleting their principal—a capital preservation dealbreaker.

The Bottom Line: Prioritize Stability for Retirement

For retirees, the total return picture must outweigh short-term yield gains. SCHY's superior risk-adjusted returns (ranked 85 vs. IDVO's 77) and lower fees make it the prudent choice:
- Lower volatility reduces the likelihood of forced selling during downturns.
- Passive management avoids active manager pitfalls, like timing errors or overconcentration.
- Capital preservation ensures withdrawals don't outpace growth.

IDVO's higher yield might appeal to those comfortable with risk, but retirees should ask: Is an extra 1.7% in dividends worth a 25% increase in daily volatility? For most, the answer is no.

Investment Recommendation

Opt for SCHY if:
- You prioritize capital preservation and steady withdrawals.
- You want a low-cost, passive fund with global diversification.

Consider IDVO only if:
- You can tolerate higher volatility and fees for potentially higher income.
- Your portfolio has a buffer against drawdowns (e.g., non-ETF assets).

Retirement is not a race to maximize yield—it's about sleeping well. SCHY's metrics align with that goal.

Data as of June 2025. Past performance does not guarantee future results.