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 $14.70 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

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 1.87%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 19.50% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Reddit Inc Class A (RDDT) accounts for about 0.46% of total assets, followed by Affirm Holdings Inc Class A (AFRM) and Intra Cellular Therapies Inc (ITCI).

The top 10 holdings account for about 3.32% 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 lost about -18.66% so far this year and is down about -10.84% in the last one year (as of 04/08/2025). In the past 52-week period, it has traded between $20.98 and $28.32.

The ETF has a beta of 1.12 and standard deviation of 22.18% for the trailing three-year period, making it a medium risk choice in the space. With about 1726 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. Small-Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SCHA is a great option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

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 $56.20 billion in assets, iShares Core S&P Small-Cap ETF has $69.66 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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

iShares Russell 2000 ETF (IWM): ETF Research Reports

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

Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report

Reddit Inc. (RDDT) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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