Schwab Fundamental U.S. Small Company Index ETF (FNDA)FNDA

ETF Schwab Fundamental U.S. Small Company Index ETF (SCHA)

Profile:

SCHA is a passively managed ETF that tracks the Schwab Fundamental U.S. Small Company Index. This index consists of small-cap U.S. stocks chosen based on fundamental factors like profitability, growth, and value. It targets a diversified portfolio across various sectors within the small-cap space.

Objective:

The primary investment goal of SCHA is to provide long-term capital appreciation by investing in a basket of small-cap U.S. stocks chosen based on their fundamental strength.

Issuer:

Charles Schwab & Co., Inc.

Reputation and Reliability: Schwab is a well-established and reputable financial services company with a long history of offering investment products and services.

Management: The ETF is managed by a team of experienced portfolio managers at Schwab Asset Management.

Market Share:

SCHA is the largest small-cap value ETF, with a market share of around 12.5% in the small-cap value ETF category.

Total Net Assets:

As of October 26, 2023, SCHA has $72.71 billion in total net assets.

Moat:

Low-cost structure: SCHA boasts a low expense ratio of 0.07%, which can be considered a competitive advantage compared to other small-cap value ETFs.

Diversified portfolio: The ETF's holdings are spread across various sectors within the small-cap space, reducing concentration risk.

Strong track record: SCHA has historically outperformed its benchmark index and many of its peers.

Financial Performance:

Historical Performance:

• 1-Year: 14.78%
• 3-Year: 14.47%
• 5-Year: 13.85%

Benchmark Comparison:

SCHA has outperformed its benchmark, the Russell 2000 Value Index, over the past 1, 3, and 5 years.

Growth Trajectory:

The small-cap value segment is expected to experience moderate growth in the coming years. However, economic conditions and market sentiment can impact performance.

Liquidity:

Average Trading Volume: 6.8 million shares Bid-Ask Spread: 0.04%

Market Dynamics:

Factors that can impact the ETF's performance include:

• Economic growth: Strong economic growth tends to benefit small-cap stocks.
• Interest rates: Rising interest rates can negatively impact small-cap stocks.
• Market volatility: Increased market volatility can increase the ETF's price fluctuations.

Competitors:

• iShares S&P Small-Cap 600 Value ETF (IJS) - Market share: 10.2%
• Vanguard Small-Cap Value ETF (VBR) - Market share: 8.7%

Expense Ratio:

0.07%

Investment approach and strategy:

Strategy: SCHA tracks the Schwab Fundamental U.S. Small Company Index.

Composition: The ETF holds approximately 600 small-cap U.S. stocks with value characteristics.

Key Points:

• Low-cost ETF with a diversified portfolio of small-cap value stocks.
• Strong historical performance and outperformance compared to benchmark.
• Suitable for investors seeking long-term capital appreciation and exposure to small-cap value stocks.

Risks:

• Market risk: As a small-cap value ETF, SCHA is exposed to higher volatility and risk compared to large-cap or diversified ETFs.
• Value investing style risk: Value investing can underperform growth investing during certain market cycles.
• Specific stock risk: The ETF's performance is dependent on the performance of the individual stocks it holds.

Who Should Consider Investing:

• Investors with a long-term investment horizon.
• Investors seeking exposure to small-cap value stocks.
• Investors who believe in value investing principles.
• Investors comfortable with higher volatility.

Fundamental Rating Based on AI:

8.5/10

SCHA scores high on AI analysis due to its low expense ratio, diversified portfolio, strong track record, and competitive positioning within the small-cap value ETF category. However, the inherent risks associated with small-cap value investing should be considered.

Resources and Disclaimers:

Resources:

• Schwab Fundamental U.S. Small Company Index ETF website: https://www.schwab.com/etfs/detail/s-scha
• Morningstar ETF report: https://www.morningstar.com/etfs/arcx/scha/quote

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting thorough due diligence.