While they both have strong long-term track records, the Schwab U.S. Dividend Equity ETF (SCHD +0.28%) and the Vanguard Total Stock Market ETF (VTI +0.74%) construct their portfolios very differently.

This Vanguard exchange-traded fund (ETF) essentially invests in the entire investable U.S. equity market. This Schwab ETF targets dividend-paying stocks with healthy balance sheets, long histories of dividend payments, and above-average yields.

They can both fit into almost any portfolio, but one of them is built to do better over the long term.

SCHD vs. VTI: The tech allocation makes the difference

The Schwab U.S. Dividend Equity ETF is considered one of the best dividend ETFs, and for good reason. Its high-quality tilt, dividend sustainability, and high yield make it appropriate for both income seekers and anyone looking for a more conservative complement to their portfolio.

But it is more defensive, which means it doesn’t have the upside potential that many growth ETFs or even broad market funds have.

Vanguard Total Stock Market ETF

Today’s Change

(0.74%) $2.67

Current Price

$362.87

The Vanguard Total Stock Market ETF does currently have that potential. Even though it holds roughly 3,500 stocks, it has about 36% of its portfolio invested in tech. That is going to give it more upside potential over the long term, just as it has over the past two decades.

To reiterate, both are great ETFs. But when it comes to long-term upside, the Vanguard Total Stock Market ETF is more likely to hit the mark.