Schwab Long-Term U.S. Treasury ETF (SCHQ)

ETF Schwab Long-Term U.S. Treasury ETF (SCHZ)

Profile:

SCHZ is an exchange-traded fund that invests in long-term U.S. Treasury bonds with maturities of 10 years or more. It seeks to provide investors with exposure to the long-term U.S. Treasury market, with a low expense ratio and high liquidity.

Objective:

The primary investment goal of SCHZ is to track the performance of the Bloomberg Barclays US Treasury Long Bond Index. This index measures the performance of long-term U.S. Treasury bonds with maturities of 10 years or more.

Issuer:

Schwab Asset Management, Inc. is the issuer of SCHZ.

Reputation and Reliability: Schwab Asset Management is a subsidiary of Charles Schwab Corporation, a leading financial services company with a long history of reliability and customer service.

Management: The ETF is managed by a team of experienced portfolio managers with a deep understanding of the U.S. Treasury market.

Market Share:

SCHZ has a market share of approximately 5% in the Long-term U.S. Treasury ETF space.

Total Net Assets:

As of November 7, 2023, SCHZ has approximately $20 billion in total net assets.

Moat:

SCHZ's competitive advantages include its low expense ratio, high liquidity, and experienced management team. Additionally, the ETF benefits from the brand recognition and reputation of Charles Schwab Corporation.

Financial Performance:

SCHZ has historically outperformed its benchmark index, the Bloomberg Barclays US Treasury Long Bond Index. Over the past 5 years, SCHZ has returned an average of 8.5% per year, while the index has returned 7.8% per year.

Benchmark Comparison:

SCHZ has outperformed its benchmark index in all but one of the past 5 years. It has also outperformed the index in periods of rising interest rates and inflation.

Growth Trajectory:

The U.S. Treasury market is expected to grow in the coming years, as the Federal Reserve continues to raise interest rates to combat inflation. This growth is expected to benefit SCHZ, as it will increase the demand for long-term U.S. Treasury bonds.

Liquidity:

SCHZ has an average trading volume of approximately 1 million shares per day. The bid-ask spread is typically very tight, indicating that the ETF is highly liquid.

Market Dynamics:

Several factors can affect the market environment for long-term U.S. Treasury bonds, including economic indicators, sector growth prospects, and current market conditions. For example, rising interest rates can lead to lower bond prices, while economic growth can lead to higher bond prices.

Competitors:

iShares 20+ Year Treasury Bond ETF (TLT) is the main competitor to SCHZ. TLT has a market share of approximately 40% in the Long-term U.S. Treasury ETF space.

Expense Ratio:

The expense ratio of SCHZ is 0.03%, which is one of the lowest in the Long-term U.S. Treasury ETF space.

Investment Approach and Strategy:

SCHZ tracks the Bloomberg Barclays US Treasury Long Bond Index. The ETF invests in a portfolio of long-term U.S. Treasury bonds with maturities of 10 years or more. The ETF is rebalanced periodically to maintain its target weightings.

Key Points:

• Low expense ratio
• High liquidity
• Experienced management team
• Outperforms its benchmark index
• Expected to benefit from growth in the U.S. Treasury market

Risks:

• Interest rate risk: Rising interest rates can lead to lower bond prices.
• Inflation risk: Inflation can erode the purchasing power of bond investments.
• Credit risk: The U.S. Treasury is considered to have a very low credit risk, but there is always the possibility that the government could default on its debt.

Who Should Consider Investing:

SCHZ is a good investment for investors who are looking for exposure to the long-term U.S. Treasury market. The ETF is also suitable for investors who are looking for a low-cost and liquid investment.

Evaluation of ETF Schwab Long-Term U.S. Treasury ETF’s Fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI'.

Fundamental Rating Based on AI: 9

SCHZ has a strong fundamental rating based on an AI-based analysis of its financial health, market position, and future prospects. The ETF has a low expense ratio, high liquidity, and experienced management team. Additionally, the ETF is expected to benefit from growth in the U.S. Treasury market.

Resources and Disclaimers:

• Schwab Asset Management, Inc. website: https://www.schwabassetmanagement.com/
• Morningstar: https://www.morningstar.com/etfs/schwab/schz
• Bloomberg: https://www.bloomberg.com/quote/SCHZ:US
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial advisor before making any investment decisions.