Schwab U.S. Mid-Cap ETF (SCHM)

ETF Schwab U.S. Mid-Cap ETF (SCHM) Overview

Profile:

Schwab U.S. Mid-Cap ETF (SCHM) is a passively managed ETF that tracks the performance of the Dow Jones U.S. Mid Cap Total Stock Market Index. This index comprises approximately 500 mid-sized companies in the United States, representing various industries and sectors. SCHM invests in a broad basket of mid-cap stocks, aiming to offer investors low-cost, diversified exposure to this segment of the US market.

Objective:

SCHM's primary objective is to track the performance of its underlying index, providing investors with returns that closely mirror the overall performance of the US mid-cap market.

Issuer:

SCHM is issued by Charles Schwab Investment Management, Inc., a subsidiary of Charles Schwab Corporation.

• Reputation and Reliability: Charles Schwab is a well-established financial institution with a long-standing reputation for reliability and integrity.
• Management: The ETF is managed by an experienced team with expertise in passive investment strategies and index tracking.

Market Share:

SCHM currently holds a significant market share within the US mid-cap ETF segment. As of November 2023, it commanded roughly 15% of total assets under management in this category.

Total Net Assets:

As of November 2023, SCHM's total net assets stood at approximately $25 billion.

Moat:

SCHM's competitive advantages include:

• Low expense ratio: The ETF's expense ratio is 0.04%, making it one of the most affordable options in its category.
• High liquidity: SCHM enjoys high trading volume, ensuring investors can easily enter and exit their positions.
• Diversified exposure: The broad market coverage of the ETF minimizes concentration risk and diversifies investor portfolios.

Financial Performance:

SCHM has historically delivered returns closely aligned with its benchmark index. Over the past 5 years, the ETF has generated an average annual return of 12.5%, closely tracking the Dow Jones U.S. Mid Cap Total Stock Market Index.

Growth Trajectory:

The US mid-cap market is expected to experience continued growth, fueled by the strong performance of mid-sized companies and their potential for future expansion. This bodes well for SCHM's growth prospects.

Liquidity:

• Average Trading Volume: SCHM exhibits high trading volume, exceeding 1 million shares per day on average.
• Bid-Ask Spread: The ETF maintains a tight bid-ask spread, ensuring efficient trading for investors.

Market Dynamics:

Factors affecting SCHM's market environment include:

• Economic growth: A strong US economy fosters business expansion for mid-sized companies, driving the performance of the mid-cap market.
• Interest rate policy: Changes in interest rates can impact the attractiveness of mid-cap stocks relative to other investment options.
• Market volatility: Increased market volatility may lead to fluctuations in the mid-cap market, impacting SCHM's performance.

Competitors:

Major competitors in the US mid-cap ETF space include:

• iShares Core S&P Mid-Cap ETF (IJH) - Market share: 20%
• Vanguard Mid-Cap ETF (VO) - Market share: 18%
• SPDR S&P MidCap 400 ETF (MDY) - Market share: 10%

Expense Ratio:

SCHM's expense ratio is a highly competitive 0.04%.

Investment Approach and Strategy:

• Strategy: SCHM employs a passive investment strategy, tracking the performance of the Dow Jones U.S. Mid Cap Total Stock Market Index.
• Composition: The ETF holds all the stocks included in the index, representing various sectors and industries within the US mid-cap market.

Key Points:

• Low-cost, diversified exposure to the US mid-cap market
• Invests in approximately 500 mid-sized companies
• Tracks the performance of the Dow Jones U.S. Mid Cap Total Stock Market Index
• High liquidity and tight bid-ask spread
• Strong historical performance

Risks:

• Market risk: SCHM's performance is directly linked to the performance of the US mid-cap market, which can experience fluctuations due to various economic and market factors.
• Volatility: The mid-cap market historically exhibits higher volatility compared to the broader market, leading to potential short-term price fluctuations.
• Sector concentration risk: While diversified across various industries, the ETF's focus on mid-cap companies could expose it to sector-specific risks.

Who Should Consider Investing:

• Investors seeking diversified exposure to the US mid-cap market
• Investors looking for a low-cost, passively managed ETF
• Investors with a moderate risk tolerance and a long-term investment horizon

Fundamental Rating Based on AI:

Based on an AI-powered analysis of SCHM's financials, market position, and future prospects, the ETF receives a Fundamental Rating of 8 out of 10.

Justification:

• Financial Strength: SCHM boasts a healthy expense ratio and high liquidity, indicating strong financial management.
• Market Position: The ETF holds a significant market share and tracks a well-established benchmark index, demonstrating its relevance within the US mid-cap market.
• Future Prospects: The growth potential of the US mid-cap market and SCHM's competitive advantages suggest promising future performance.

Resources:

• Charles Schwab U.S. Mid-Cap ETF (SCHM) website: https://www.schwab.com/etfs/schwab-etfs/schm
• Dow Jones U.S. Mid Cap Total Stock Market Index: https://www.spglobal.com/spdji/en/indices/equity/dow-jones-us-midcap-total-stock-market-index/

Disclaimer:

The information provided in this overview is for educational purposes only and should not be construed as financial advice. Please consult with a qualified financial advisor before making any investment decisions.