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Should Schwab U.S. SmallCap ETF (SCHA) Be on Your Investing Radar?

Style Box ETF report for SCHA

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This story originally appeared on Zacks

The Schwab U.S. SmallCap ETF (SCHA) was launched on 11/03/2009, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.

- Zacks

The fund is sponsored by Charles Schwab. It has amassed assets over $17.10 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 1.19%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 16.80% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Cloudflare Inc Class A Common Stock Usd.001 (NET) accounts for about 0.60% of total assets, followed by Amc Entertainment Hlds Cl A Common Stock Usd.01 (AMC) and Caesars Entertainment Inc Common Stock (CZR).

The top 10 holdings account for about 3.91% 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 18.14% so far this year and it's up approximately 17.34% in the last one year (as of 12/30/2021). In the past 52-week period, it has traded between $87.78 and $110.14.

The ETF has a beta of 1.21 and standard deviation of 28.27% for the trailing three-year period, making it a medium risk choice in the space. With about 1854 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. SmallCap 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 SmallCap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $70.43 billion in assets, iShares Core S&P SmallCap ETF has $75.66 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. SmallCap ETF (SCHA): ETF Research Reports

 

Caesars Entertainment, Inc. (CZR): Free Stock Analysis Report

 

iShares Russell 2000 ETF (IWM): ETF Research Reports

 

AMC Entertainment Holdings, Inc. (AMC): Free Stock Analysis Report

 

iShares Core S&P SmallCap ETF (IJR): ETF Research Reports

 

Cloudflare, Inc. (NET): Free Stock Analysis Report

 

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