Schwab 5-10 Year Corporate Bond ETF (SCHI)

Overview

The Schwab 5-10 Year Corporate Bond ETF (SCHI) seeks to track the total return of an index composed of U.S. dollar-denominated, investment-grade corporate bonds with remaining maturities between 5 and 10 years. It focuses on the corporate bond sector with an emphasis on intermediate-term maturities.

Reputation and Reliability

Schwab is a well-established and reputable financial services firm known for its low-cost investment products and client-centric approach.

Management Expertise

Schwab Asset Management has extensive experience in managing fixed-income ETFs and a team of experienced investment professionals.

Goal

The primary investment goal of SCHI is to track the total return of an index composed of U.S. dollar-denominated, investment-grade corporate bonds with maturities between 5 and 10 years.

Investment Approach and Strategy

Strategy: SCHI aims to track the Bloomberg US 5-10 Year Corporate Bond Index, utilizing a passive investment strategy.

Composition SCHI holds a portfolio of U.S. dollar-denominated, investment-grade corporate bonds with maturities between 5 and 10 years.

Market Share: SCHI holds a significant market share within the intermediate-term corporate bond ETF category.

Total Net Assets (AUM): 6360000000

Key Competitors

• Vanguard Intermediate-Term Corporate Bond ETF (VCIT)
• iShares Intermediate-Term Corporate Bond ETF (IGIB)
• SPDR Portfolio Intermediate Term Corporate Bond ETF (ITRM)

Competitive Landscape

The intermediate-term corporate bond ETF market is highly competitive, dominated by a few large players like Vanguard and iShares. SCHI competes on price with its low expense ratio, which could be considered an advantage, but has lower AUM compared to VCIT and IGIB. This low-cost advantage is balanced by its slightly lower trading volume.

Historical Performance: SCHI's performance closely tracks its benchmark index. The ETF is designed for consistent returns mirroring intermediate investment-grade corporate bonds.

Benchmark Comparison: SCHI exhibits tracking error that is relatively low due to Schwab's efficient management and indexing strategy.

Expense Ratio: 0.04

Average Trading Volume

SCHI exhibits moderate liquidity, reflected in its average daily trading volume which enables ease of trading for most investors.

Bid-Ask Spread

SCHI generally has a tight bid-ask spread, indicating low transaction costs for investors.

Market Environment Factors

SCHI's performance is influenced by factors such as interest rate movements, credit spreads, and overall economic conditions; lower interest rates typically boost bond prices, while wider credit spreads negatively affect them.

Growth Trajectory

SCHI's growth trajectory depends on the demand for intermediate-term corporate bond exposure and Schwab's ability to attract and retain assets; any changes to the fund are driven by the index which it tracks.

Competitive Edge

SCHI's primary competitive advantage is its low expense ratio, making it an attractive option for cost-conscious investors seeking exposure to the intermediate-term corporate bond market. The ETF is designed to accurately track its benchmark index, providing investors with predictable and reliable returns. Its association with the well-established and trusted Schwab brand further enhances its appeal. Lower cost relative to assets under management allows investors more consistent returns.

Volatility

SCHI's volatility is generally moderate, reflecting the relatively stable nature of investment-grade corporate bonds. Interest rate risk is its main source of volatility.

Market Risk

The primary market risk associated with SCHI is interest rate risk (duration risk), as rising interest rates can cause bond prices to decline. Credit risk is also a factor, as the ETF holds corporate bonds.

Ideal Investor Profile

The ideal investor for SCHI is a risk-averse individual seeking stable income and moderate capital appreciation through exposure to investment-grade corporate bonds. It could be a part of a diversified fixed-income allocation.

Market Risk

SCHI is suitable for long-term investors, who want steady income, conservative growth, or passive index followers seeking diversified bond exposure.

SCHI is a low-cost ETF that provides exposure to U.S. dollar-denominated, investment-grade corporate bonds with maturities between 5 and 10 years. It is suitable for risk-averse investors seeking stable income and moderate capital appreciation. Its main competitive advantage is its low expense ratio, but its performance is susceptible to interest rate movements and credit risk. Due to its intermediate duration, it offers a middle-ground in terms of interest rate sensitivity. SCHI's AUM makes it a good choice compared to its competitors.

Data Sources:

• Schwab Asset Management
• Bloomberg
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor.