I will be the first to admit that there's plenty that I don't know when it comes to the stock market, investing, etc. However, I am always willing to learn, and I want to understand the "why" behind some choices that others recommend. I am not chasing past performance, but I do use back testing as a metric (one out of many) to help with making decisions. That being said, I am struggling to understand SCHD and why it keeps getting recommended by financial advisors.
In the following back tests, I used three different 3-fund portfolio examples over the past decade. Here are the numbers:
Portfolio 1: SPYM 40%, SCHG 30%, SCHD 30%
Total return: 308.31%
Max drawdown: 23.7%
Portfolio 2: SPYM 40%, SCHG 30%, FTEC 30%
Total return: 432.15%
Max drawdown: 28.8%
Portfolio 3: SPYM 40%, FTEC 30%, SMH 30%
Total return: 644.39%
Max drawdown: 31.3%
Portfolio #1 underperformed over that decade. Yes, the other two are more tech heavy, but aren't we living in a tech-driven age right now? Are semiconductors or advancing technology going away? Please help me understand why advisors are recommending SCHD over a more tech centric portfolio to capture growth right now. Thank you in advance!