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

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

Profile: SCHZ is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the Bloomberg U.S. Treasury Long Bond Index. It invests primarily in U.S. Treasury bonds with maturities of over 10 years. The ETF has a low expense ratio of 0.03% and offers a convenient way to gain exposure to the long-term U.S. Treasury market.

Objective: The primary investment goal of SCHZ is to provide long-term capital appreciation through exposure to U.S. Treasury bonds.

Issuer: Charles Schwab Investment Management, Inc. is the issuer of SCHZ. Schwab is a well-known and reputable financial services company with a long history of managing investment products.

Market Share: SCHZ has a market share of approximately 1.5% in the long-term U.S. Treasury ETF segment.

Total Net Assets: As of November 14, 2023, SCHZ has total net assets of approximately $13.5 billion.

Moat: SCHZ's primary competitive advantage is its low expense ratio. This allows investors to keep more of their returns and potentially outperform similar ETFs with higher fees. Additionally, SCHZ benefits from the strong reputation and track record of its issuer, Charles Schwab.

Financial Performance: SCHZ has historically delivered strong returns. Over the past 5 years, the ETF has generated an average annual return of 5.7%, outperforming its benchmark index.

Growth Trajectory: The long-term outlook for U.S. Treasury bonds is positive, as low interest rates and inflation are expected to continue to support bond prices.

Liquidity: SCHZ is a highly liquid ETF, with an average daily trading volume of over 1 million shares. The bid-ask spread is also very tight, indicating that investors can easily buy and sell shares at a fair price.

Market Dynamics: Factors affecting SCHZ's market environment include interest rate changes, economic growth, and inflation.

Competitors: Key competitors of SCHZ include iShares U.S. Treasury Bond ETF (GOVT) and Vanguard Long-Term Treasury ETF (VGLT).

Expense Ratio: The expense ratio for SCHZ is 0.03%.

Investment Approach and Strategy: SCHZ seeks to replicate the performance of the Bloomberg U.S. Treasury Long Bond Index. The ETF invests in a diversified portfolio of U.S. Treasury bonds with maturities of over 10 years.

Key Points:

• Low expense ratio of 0.03%
• Invests in U.S. Treasury bonds with maturities of over 10 years
• Seeks to track the performance of the Bloomberg U.S. Treasury Long Bond Index
• Highly liquid with an average daily trading volume of over 1 million shares

Risks:

• Interest rate risk: Rising interest rates can lead to a decline in the value of bonds.
• Inflation risk: Inflation can erode the purchasing power of bond returns.
• Liquidity risk: Although SCHZ is a highly liquid ETF, there is a small chance that it may become difficult to sell shares at a fair price during periods of market stress.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation
• Investors looking for a low-cost way to gain exposure to the U.S. Treasury market
• Investors with a low risk tolerance

Fundamental Rating Based on AI: 8/10

Analysis: SCHZ receives a high AI-based rating due to its strong financial performance, low expenses, and solid track record. The ETF is well-positioned to benefit from the continued low interest rate environment and is a suitable investment for a variety of investors.

Resources:

• Schwab Long-Term U.S. Treasury ETF (SCHZ)
• Bloomberg U.S. Treasury Long Bond Index
• Charles Schwab Investment Management, Inc.

Disclaimer: The information provided in this analysis should not be considered financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.