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Should Schwab U.S. LargeCap Value ETF (SCHV) Be on Your Investing Radar?

Style Box ETF report for SCHV

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This story originally appeared on Zacks

Launched on 12/11/2009, the Schwab U.S. LargeCap Value ETF (SCHV) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

- Zacks

The fund is sponsored by Charles Schwab. It has amassed assets over $10.24 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

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 the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.90%.

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 19.80% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B) accounts for about 2.44% of total assets, followed by Jpmorgan Chase + Co Common Stock Usd1.0 (JPM) and Johnson + Johnson Common Stock Usd1.0 (JNJ).

The top 10 holdings account for about 15.86% of total assets under management.

Performance and Risk

SCHV seeks to match the performance of the Dow Jones U.S. Large-Cap Value Total Stock Market Index before fees and expenses. This Index includes the large-cap value portion of the Dow Jones U.S.Total Stock Market Index actually available to investors in the marketplace and this index includes the components ranked 1-750 by full market capitalization and that are classified as value based on a number of factors.The index is a float-adjusted market capitalization weighted index.

The ETF return is roughly 24.93% so far this year and was up about 36.68% in the last one year (as of 11/09/2021). In the past 52-week period, it has traded between $55.67 and $72.35.

The ETF has a beta of 0.98 and standard deviation of 23.10% for the trailing three-year period, making it a medium risk choice in the space. With about 542 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. LargeCap Value 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, SCHV is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $57.86 billion in assets, Vanguard Value ETF has $88.66 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

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. LargeCap Value ETF (SCHV): ETF Research Reports

 

JPMorgan Chase & Co. (JPM): Free Stock Analysis Report

 

Johnson & Johnson (JNJ): Free Stock Analysis Report

 

Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report

 

Vanguard Value ETF (VTV): ETF Research Reports

 

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

 

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