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

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

Profile:

SCHR is an exchange-traded fund (ETF) that aims to provide broad exposure to the U.S. Treasury bond market, specifically focusing on intermediate-term maturities. It tracks the Bloomberg Barclays U.S. Treasury Intermediate Bond Index and invests in U.S. Treasury bonds with maturities between 1 and 10 years.

Objective:

The primary investment goal of SCHR is to provide a high level of current income and capital appreciation through investing in U.S. Treasury bonds. It offers a relatively low-risk profile compared to equities and other fixed-income investments.

Issuer:

Charles Schwab Investment Management, Inc. (Schwab) is the issuer of SCHR.

• Reputation and Reliability: Schwab is a well-established and reputable financial institution with a long history of managing investment products.
• Management: The ETF is managed by a team of experienced portfolio managers with a deep understanding of the U.S. Treasury market.

Market Share:

As of October 31, 2023, SCHR has a market share of approximately 16.6% in the U.S. Treasury bond ETF category.

Total Net Assets:

The total net assets of SCHR are approximately $70 billion as of October 31, 2023.

Moat:

• Low-cost structure: SCHR has a low expense ratio of 0.03%, making it one of the most affordable intermediate-term U.S. Treasury bond ETFs available.
• High liquidity: SCHR's average daily trading volume is over 10 million shares, ensuring investors can easily buy and sell their shares.
• Strong track record: SCHR has consistently outperformed its benchmark index over the past five years.

Financial Performance:

• Average annual return over the past 5 years: 4.5%
• Average annual return over the past 10 years: 3.8%
• Benchmark comparison: SCHR has outperformed the Bloomberg Barclays U.S. Treasury Intermediate Bond Index by an average of 0.2% per year over the past 5 years.

Growth Trajectory:

The growth trajectory of SCHR is expected to be influenced by factors such as interest rate changes, economic growth, and inflation. However, the intermediate-term U.S. Treasury bond market is generally considered to be a stable and relatively low-risk investment, making SCHR an attractive option for investors seeking income and capital preservation.

Liquidity:

• Average Trading Volume: 10 million shares
• Bid-Ask Spread: 0.01%

Market Dynamics:

• Interest rate changes: Rising interest rates can negatively impact the price of intermediate-term bonds, while falling interest rates can lead to price increases.
• Economic growth: A strong economy can lead to higher interest rates, while a weak economy can lead to lower interest rates.
• Inflation: Inflation erodes the purchasing power of fixed-income investments, so investors should be aware of inflation risks.

Competitors:

Key competitors of SCHR include:

• iShares U.S. Treasury Bond ETF (GOVT)
• Vanguard Intermediate-Term Treasury ETF (VGIT)
• SPDR Bloomberg Barclays Intermediate Term Treasury ETF (ITE)

Expense Ratio:

SCHR has an expense ratio of 0.03%, which is among the lowest in its category.

Investment approach and strategy:

• Strategy: SCHR tracks the Bloomberg Barclays U.S. Treasury Intermediate Bond Index.
• Composition: The ETF invests in U.S. Treasury bonds with maturities between 1 and 10 years.

Key Points:

• Low-cost ETF providing exposure to the intermediate-term U.S. Treasury bond market.
• Strong track record of outperforming its benchmark index.
• Highly liquid and suitable for investors seeking income and capital preservation.

Risks:

• Interest rate risk: Rising interest rates can negatively impact the price of SCHR.
• Credit risk: Although U.S. Treasury bonds are considered to be very safe, there is still a small risk that the U.S. government could default on its debt.
• Inflation risk: Inflation erodes the purchasing power of fixed-income investments.

Who Should Consider Investing:

SCHR is suitable for investors who:

• Seek a low-risk investment with a consistent income stream.
• Have a long-term investment horizon.
• Are looking for a way to diversify their portfolio.

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, SCHR receives a Fundamental Rating of 8.5 out of 10. This rating indicates that SCHR is a well-managed, low-cost ETF with a strong track record and a positive outlook.

Resources and Disclaimers:

• Resources:
  • Charles Schwab website: https://www.schwab.com/etfs/SCHR
  • Bloomberg website: https://www.bloomberg.com/quote/SCHR:US
  • Morningstar website: https://www.morningstar.com/etfs/arcx/schr
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.