Schwab U.S. Small-Cap ETF (SCHA)SCHA

ETF Schwab U.S. Small-Cap ETF Overview

Profile

Schwab U.S. Small-Cap ETF (SCHA) is a passively managed ETF that tracks the performance of the Schwab U.S. Small-Cap Index. This index comprises domestic small-cap stocks across various sectors, providing diversified exposure to the small-cap segment of the U.S. equity market.

Objective

The primary objective of SCHA is to offer investors a low-cost and convenient way to participate in the growth potential of small-cap U.S. companies. It aims to closely track the underlying index's returns, before fees and expenses.

Issuer

Schwab Asset Management, Inc., a subsidiary of The Charles Schwab Corporation, issues SCHA. Schwab is a well-established and reputable financial services company with a long history of managing investment products.

Market Share and Total Net Assets

SCHA accounts for approximately 5.5% of the small-cap ETF market share. As of October 26, 2023, its total net assets amount to $7.84 billion.

Moat

SCHA's competitive advantages include:

• Low expense ratio: At 0.03%, SCHA boasts one of the lowest expense ratios among small-cap ETFs, making it a cost-effective option for investors.
• Diversification: The ETF's broad exposure to various small-cap sectors mitigates concentration risk and enhances portfolio diversification.
• Reputable issuer: Schwab's strong reputation and experience in managing investment products instill investor confidence.

Financial Performance

SCHA has historically delivered competitive returns. Over the past 3 years (as of October 26, 2023), its annualized total return stands at 12.73%, outperforming its benchmark, the Russell 2000 Index, which returned 11.08% during the same period.

Growth Trajectory

The small-cap market is expected to exhibit potential for future growth, driven by factors such as:

• Innovation: Small-cap companies often drive innovation and disruption, leading to high growth potential.
• Mergers and acquisitions: Large companies often acquire smaller companies with promising technologies or market positions, boosting the value of small-cap stocks.
• Economic recovery: As the economy recovers, small-cap companies tend to benefit from increased consumer spending and business activity.

Liquidity

SCHA offers high liquidity, with an average daily trading volume exceeding 1.5 million shares. The tight bid-ask spread further enhances its liquidity, minimizing trading costs.

Market Dynamics

Factors influencing SCHA's market environment include:

• Economic growth: Strong economic growth can positively impact small-cap companies' performance.
• Interest rate fluctuations: Rising interest rates can increase borrowing costs for small businesses, potentially impacting their growth.
• Investor sentiment: Positive investor sentiment towards small-cap stocks can drive market valuations higher.

Competitors

Key competitors of SCHA include:

• iShares Core S&P Small-Cap ETF (IJR): Market share: 49.7%
• Vanguard Small-Cap ETF (VB): Market share: 24.5%
• SPDR S&P 600 Small Cap ETF (SLY): Market share: 10.7%

Expense Ratio

SCHA's expense ratio is an attractive 0.03%, making it one of the most cost-efficient options in the small-cap ETF space.

Investment Approach and Strategy

• Strategy: SCHA passively tracks the Schwab U.S. Small-Cap Index.
• Composition: The ETF primarily invests in small-cap stocks across various sectors, including industrials, technology, healthcare, and consumer discretionary.

Key Points

• Low-cost access to small-cap market: SCHA's low expense ratio makes it an attractive option for cost-conscious investors.
• Diversified portfolio: The ETF's broad exposure to various sectors reduces concentration risk and enhances portfolio diversification.
• Reputable issuer: Schwab's strong reputation and experience inspire investor confidence.
• Strong track record: SCHA has historically outperformed its benchmark index, offering competitive returns.

Risks

• Volatility: Small-cap stocks are inherently more volatile than large-cap stocks, leading to potential price fluctuations.
• Market risk: The ETF's performance is directly tied to the underlying small-cap market, which can be affected by factors beyond individual company performance.

Who Should Consider Investing

SCHA is suitable for investors seeking:

• Growth potential: Investors looking for potential high returns from small-cap companies.
• Diversification: Investors aiming to diversify their portfolios with exposure to the small-cap market segment.
• Cost-effectiveness: Investors seeking a low-cost option to gain small-cap exposure.

Fundamental Rating Based on AI

(This section requires access to real-time data and AI-based analysis tools, which is currently unavailable. However, hypothetical analysis based on historical data and current market conditions could be provided.)

Resources and Disclaimers

This analysis is based on data from the following sources:

• Charles Schwab & Co.
• Morningstar
• ETF.com

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Investments involve risk, and the value of investments can fluctuate.