SCHD and SPMO Rebalanced Together — What Both ETFs Signal About the Market

The market hasn't been this divided in recent memory. S&P 500 down 5.56% year-to-date. QQQ down 6.41%. And SCHD? Up 10.5%.

While the Magnificent 7 dragged tech lower — down 12 to 13% collectively, with Microsoft and Meta hit even harder — two ETFs quietly rebalanced this week. What SCHD and SPMO changed tells a clear story about where money is moving.

SCHD — Less Energy, More Defense

The names SCHD removed speak volumes. Cisco, AbbVie, and Valero are out. In their place: UnitedHealth, Abbott Laboratories, Procter & Gamble, Qualcomm, Accenture, Comcast, ADP, and Blackstone.

Energy exposure came down. SCHD was overweight energy last year, and this rebalance corrected that by adding financials. The philosophy hasn't changed — minimal tech, maximum dividend stability. The result: +10.5% YTD while everything around it bled.

That outperformance isn't an accident. Investors have been rotating out of AI hype into defensive sectors for months now, and SCHD is the direct beneficiary.

SPMO — Meta Out, Momentum Redefined

SPMO's rebalance was more dramatic. The headline: Meta is gone. Completely removed from a fund where it was a significant holding just one cycle ago.

What replaced it? Micron, Johnson & Johnson, and Google as one of the largest positions. Caterpillar and AMD also made it in.

SPMO's philosophy is straightforward — overweight whatever has positive momentum. What's working gets more capital. The historical results validate the approach. When the S&P 500 dropped roughly 18% in 2022, SPMO fell only about 10%. Higher lows in drawdowns, higher highs in rallies. That's the pattern every long-term investor wants.

Head-to-Head Comparison

Factor	SCHD	SPMO
Strategy	High-dividend defensives	Momentum-following
Tech exposure	Deliberately minimal	Varies with momentum
Key rebalance move	Less energy, more financials	Meta removed, Google & Micron added
2022 drawdown	In line with S&P	~10% (roughly half the S&P's loss)
YTD performance	+10.5%	Outperforming S&P 500
Dividend focus	Core strength	Not a priority
Best for	Income-seekers, volatility-averse	Trend-followers, long-term alpha

What Both ETFs Are Signaling

With the Mag 7 in retreat and the NASDAQ flirting with correction territory, both ETFs are pointing the same direction: defensive positioning.

SCHD reflects it through dividends and stability. SPMO reflects it through momentum shifting toward financials, healthcare, and industrials. Both reduced or maintained low tech exposure.

This isn't about choosing one over the other. It's about deciding what ratio of defensive income (SCHD) versus momentum alpha (SPMO) makes sense for your portfolio right now. The more uncertain the market, the more valuable this combination becomes.