Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Schwab U.S. Small-Cap ETF (SCHA) is a passively managed exchange traded fund launched on 11/03/2009.

The fund is sponsored by Charles Schwab. It has amassed assets over $17.80 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.04%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.33%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 17.70% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Microstrategy Inc Class A (MSTR) accounts for about 0.53% of total assets, followed by Tenet Healthcare Corp (THC) and Carvana Class A (CVNA).

The top 10 holdings account for about 3.7% of total assets under management.

Performance and Risk

SCHA seeks to match the performance of the Dow Jones U.S. Small-Cap Total Stock Market Index before fees and expenses. The Dow Jones U.S. Small-Cap Total Stock Market Index includes the small-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace.

The ETF has gained about 8.52% so far this year and is up roughly 24.33% in the last one year (as of 10/02/2024). In the past 52-week period, it has traded between $38.13 and $51.96.

The ETF has a beta of 1.16 and standard deviation of 22.44% for the trailing three-year period, making it a medium risk choice in the space. With about 1718 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. Small-Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SCHA is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $68.39 billion in assets, iShares Core S&P Small-Cap ETF has $84.91 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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Schwab U.S. Small-Cap ETF (SCHA): ETF Research Reports

Tenet Healthcare Corporation (THC) : Free Stock Analysis Report

iShares Russell 2000 ETF (IWM): ETF Research Reports

MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report

iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports

Carvana Co. (CVNA) : Free Stock Analysis Report

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