Investing

3 Schwab ETFs to Buy With the VIX On the Rise

Chris MacDonald

Published: March 12, 2025 2:40 pm

Last Updated: March 12, 2025 2:45 pm

At the time I’m writing this, the volatility index (VIX) closely watched by many investors is trading above 25, a key level many in the market attribute to heightened investor uncertainty. The volatility index roughly measures how sporadically stocks move over given periods of time. Thus, in periods of turmoil when valuations come into question and investors broadly don’t know what to pay for particular companies, this index tends to spike.

During previous crises, investors will note sharp spikes in the VIX. Accordingly, during what many consider to be bull markets, such spikes are often viewed as potential warning signs of recessionary forces yielding their head. 

We’ll have to see whether the VIX continues higher from here, or calms down to levels closer to what we’ve seen in recent years. But for now, investors looking to manage through this uncertainty may be on the looking for exchange traded funds (ETFs) which can provide at least some form of safe harbor from potential downside in the months ahead.

Here are three such ETFs that are on my radar right now.  

Key Points About This Article:

• With the VIX surging to recent highs, many investors are looking for relatively safe places to park their capital, until the volatility dies down.
• Here are three top Schwab ETFs that may be solid bets as ways to counteract this recent market turbulence. 
• Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; get started by clicking here.(Sponsor).

Schwab U.S. Dividend Equity ETF (SCHD)

Dividend stocks are broadly viewed as relatively safer bets than many of the higher-growth stocks found in indices like the Nasdaq, for a range of reasons.

For one, companies that pay dividends tend to have positive earnings, and cash flow growth of some sort, to rely on for their distribution payments (and future dividend increases). Companies that pay dividends generally don’t like to reduce their payouts, as that’s a sign of weakness to the market. If anything, these companies tend to raise their distributions over time, requiring some level of consistent earnings growth investors like.

Thus, ETFs focused on high-quality dividend paying stocks such as the Schwab U.S. Dividend Equity ETF (SCHD) is a premier choice for many investors right now. Those seeking high dividend yields from quality U.S. companies may certainly want to consider this fund, which has grown to $68 billion in net assets while maintaining a low expense ratio of 0.06%. This ultra low expense ratio makes this ETF a cost-effective (and defensive) option for income investors. Notably, SCHD tracks companies with a strong history of dividend payments, offering a balance between stability and growth.

SCHD’s top holdings, including AbbVie, Amgen, and Coca-Cola, represent industry leaders with reliable earnings and strong cash flow. The fund’s sector allocation is well-diversified, with significant exposure to financials (18.73%), healthcare (16.67%), and consumer staples (14.37%), ensuring resilience across market cycles. By focusing on fundamentally strong dividend-paying stocks, SCHD provides steady income potential and long-term capital appreciation. This makes it a compelling choice for investors seeking passive income, stability, and lower volatility in uncertain markets.

Schwab International Dividend Equity ETF (SCD)

Taking an international approach on the above ETF, the Schwab International Dividend Equity ETF (SCD) is a top option for investors looking for global exposure to high dividend-paying stocks.

Like SCHD, SCD is constructed in a similar fashion, though this fund’s assets under management is much smaller, at just $1.6 billion. Accordingly, there may be a bit more volatility in holding such an ETF. But with international stocks outperforming U.S. stocks to start the year, I thought I’d be remiss to ignore this particular ETF and its value for those seeking even greater diversification in this current environment. 

Given the relatively higher yields of international stocks, it shouldn’t necessarily surprise investors that this ETF comes with a dividend yield of more than 9%. While that’s high by most standards, this yield really means that even without any sort of capital appreciation, long-term investors are likely to at least match the overall return of the U.S. stock market over the next decade if this fund holds steady.

I think those investors who think international stocks have further to run may certainly want to consider this high yield ETF right now. 

Schwab Core Bond ETF (SCCR)

The Schwab Core Bond ETF (SCCR) is a newly launched actively managed bond ETF designed to provide total return and income generation through investments in U.S. dollar-denominated debt securities. Introduced in February 2025, the fund has already amassed $96.42 million in net assets with a competitive expense ratio of 0.16%.

Bonds tend to outperform in periods of turmoil, as central banks around the world lower interest rates to combat floundering economic growth. If we are indeed due for a recession (and many argue based on where valuations are that we probably are), this is an ultra-safe place to park at least a portion of one’s portfolio while one waits out the potential turmoil.

Of course, after a marked stock decline is typically the best time to start accumulating stocks. But as we’ve seen in the past, stock market declines can be protracted during recessions, so we’ll have to see if this is indeed just a growth downturn or a more pronounced recession underway. 

That said, SCCR is one top bond fund I think investors may want to consider for this ETF’s stability and consistent income. Its top holdings, such as U.S. Treasury Notes and Bonds, emphasize low-risk government securities, making it a reliable choice for risk-averse investors.