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

The fund is sponsored by Charles Schwab. It has amassed assets over $19.75 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

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 1.20%.

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 Financials sector--about 19% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Affirm Holdings Inc Class A (AFRM) accounts for about 0.35% of total assets, followed by Stifel Financial Corp (SF) and Duolingo Inc Class A (DUOL).

The top 10 holdings account for about 2.84% 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 added roughly 20.33% so far this year and is up about 34.96% in the last one year (as of 12/02/2024). In the past 52-week period, it has traded between $21.67 and $28.32.

The ETF has a beta of 1.16 and standard deviation of 22.56% for the trailing three-year period, making it a medium risk choice in the space. With about 1744 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 $81.16 billion in assets, iShares Core S&P Small-Cap ETF has $94.92 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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

Stifel Financial Corporation (SF) : Free Stock Analysis Report

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

Duolingo, Inc. (DUOL) : Free Stock Analysis Report

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