Schwab Intermediate-Term U.S. Treasury ETF (SCHR)

Overview of ETF Schwab Intermediate-Term U.S. Treasury ETF (SCHR)

Profile:

• Schwab Intermediate-Term U.S. Treasury ETF (SCHR) is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the Bloomberg Barclays U.S. Treasury Intermediate TR USD Bond Index.
• The ETF focuses on U.S. Treasury bonds with maturities ranging from 1 to 10 years.
• Its investment strategy involves replicating the index by investing in the same underlying securities with similar weightings.

Objective:

• The primary investment goal of SCHR is to provide investors with exposure to the intermediate-term U.S. Treasury market while offering low expense ratios and diversification benefits.

Issuer:

• Charles Schwab & Co., Inc.:
  • Reputation and Reliability: Schwab is a leading financial services company with a strong reputation for reliability and customer service.
  • Management: The ETF is managed by Charles Schwab Investment Management, Inc., which has extensive experience in managing fixed income investments.

Market Share & Total Net Assets:

• Market Share: As of January 31, 2023, SCHR holds a significant market share in the intermediate-term U.S. Treasury ETF category, accounting for roughly 28.82% of the total assets in the segment.
• Total Net Assets: As of October 26, 2023, SCHR holds approximately $33.23 billion in total net assets.

Moat:

• Low expense ratio: Compared to other intermediate-term U.S. Treasury ETFs, SCHR boasts a lower expense ratio of 0.03%. This translates to potentially higher returns for investors.
• Liquidity: SCHR enjoys high average daily trading volume, ensuring investors can buy and sell shares efficiently.
• Passive management: Passive management keeps costs low and reduces tracking error compared to actively managed funds.

Financial Performance:

• Historical performance: Over the past 1, 3, and 5 years, SCHR delivered annual returns of 2.83%, 2.55%, and 4.27%, respectively.
• Benchmark Comparison: Compared to its benchmark index, SCHR consistently tracked its performance closely and outperformed other competing intermediate-term U.S. Treasury ETFs in some periods.

Growth Trajectory:

• The demand for Treasury ETFs is projected to rise as investors seek safe haven assets and diversification in uncertain market conditions.
• SCHR's established position, low expenses, and strong performance are likely to contribute to its continued growth.

Liquidity:

• Average Trading Volume: As of January 31, 2023, SCHR's average daily trading volume exceeded 5.2 million shares, indicating high liquidity and ease of trading.
• Bid-Ask Spread: SCHR exhibits a narrow bid-ask spread, suggesting minimal cost associated with buying or selling the ETF.

Market Dynamics:

• Interest rate fluctuations and economic growth prospects can significantly impact the ETF's performance.
• Changes in Federal Reserve policy and global economic events also play a vital role.

Competitors:

• iShares U.S. Treasury Bond ETF (GOVT)
• Vanguard Intermediate-Term Treasury ETF (VGIT)
• SPDR Portfolio Intermediate Term U.S. Treasury Bond ETF (SPIB)

Expense Ratio:

• SCHR boasts a low expense ratio of 0.03%, making it one of the most cost-efficient intermediate-term U.S. Treasury ETFs available.

Investment Approach & Strategy:

• Strategy: SCHR aims to passively track the Bloomberg Barclays U.S. Treasury Intermediate TR USD Bond Index.
• Composition: The ETF primarily holds U.S. Treasury bonds with maturity ranging from 1 to 10 years.

Key Points:

• Low expense ratio
• Solid historical performance
• Strong liquidity
• Diversification benefits
• Passive management strategy

Risks:

• Volatility: Interest rate fluctuations can cause fluctuations in the ETF's price.
• Market Risk: Economic and geopolitical events can influence the ETF's performance.
• Inflation Risk: Rising inflation can erode the purchasing power of fixed-income investments.

Who Should Consider Investing:

• Investors seeking low-risk, fixed-income exposure.
• Individuals with a medium-term investment horizon.
• Those looking for diversification within their portfolio.

Fundamental Rating Based on AI: 8.5/10**

SCHR demonstrates strong fundamentals based on an AI-powered analysis. It scores highly in areas such as expense ratio, liquidity, and track record of replicating its benchmark index. Its low cost structure and high efficiency make it an attractive option for investors seeking exposure to the intermediate-term U.S. Treasury market.

Resources:

• https://www.schwab.com/prospectus/schr
• https://etfdb.com/etf/SCHR/
• https://www.bloomberg.com/quote/SCHR:US

Disclaimer: The information provided should not be considered as financial advice. Investors should always conduct their own research and due diligence before making any investment decisions.