Schwab Strategic Trust (SCUS)

US ETF Schwab Strategic Trust: A Comprehensive Overview

Profile:

Schwab Strategic Trust (SCHX) is a passively managed ETF that aims to track the performance of the Dow Jones U.S. Broad Market Index. This index encompasses a broad range of US stocks across various sectors, offering diversified exposure to the overall US equity market.

Objective:

The primary objective of SCHX is to provide investors with long-term capital appreciation by closely mirroring the performance of the Dow Jones U.S. Broad Market Index.

Issuer:

Schwab Asset Management, Inc.

• Reputation and Reliability: Schwab Asset Management is a subsidiary of The Charles Schwab Corporation, a highly reputable and reliable financial institution with a long and successful track record in the industry.
• Management: The ETF is managed by a team of experienced investment professionals with expertise in index tracking and portfolio management.

Market Share:

SCHX holds a 0.56% market share within the broad market index ETF category.

Total Net Assets:

As of November 1, 2023, SCHX has approximately $564.84 million in total net assets.

Moat:

• Low Fees: SCHX boasts a low expense ratio of 0.03%, making it one of the most affordable broad market index ETFs available.
• Diversification: The ETF's broad market exposure provides investors with a well-diversified portfolio, mitigating sector-specific risks.
• Tax Efficiency: Due to its passive management style, SCHX generates minimal turnover, resulting in lower capital gains taxes for investors.

Financial Performance:

Historical Performance:

• 1 Year: 6.77%
• 3 Years: 10.23%
• 5 Years: 14.65%
• Since Inception (2019): 14.07%

Benchmark Comparison: SCHX has consistently outperformed its benchmark, the Dow Jones U.S. Broad Market Index, over the past 1, 3, and 5-year periods.

Growth Trajectory:

The ETF has experienced steady growth in its assets under management and trading volume, indicating increasing investor interest.

Liquidity:

• Average Trading Volume: 2,130,888 shares
• Bid-Ask Spread: 0.01%

Market Dynamics:

Factors influencing the ETF's market environment include:

• Economic Indicators: Overall economic growth, interest rates, and inflation.
• Sector Growth Prospects: Performance of various industries within the US economy.
• Market Volatility: Broader market fluctuations and investor sentiment.

Competitors:

• iShares CORE S&P 500 (IVV) - Market Share: 23.61%
• Vanguard Total Stock Market ETF (VTI) - Market Share: 14.77%
• SPDR S&P 500 ETF Trust (SPY) - Market Share: 11.45%

Expense Ratio:

0.03%

Investment Approach and Strategy:

• Strategy: SCHX passively tracks the Dow Jones U.S. Broad Market Index.
• Composition: The ETF primarily holds large-cap and mid-cap stocks across various sectors of the US economy.

Key Points:

• Low-cost exposure to the broad US stock market.
• Diversified portfolio mitigating sector-specific risks.
• Tax-efficient investment due to passive management.
• Outperformance compared to the benchmark index.

Risks:

• Market Risk: The ETF's value is directly linked to the performance of the underlying stocks, making it susceptible to market fluctuations.
• Volatility: The ETF's historical volatility is similar to the broader market, meaning its value can experience significant swings.
• Tracking Error: While aiming to track the index closely, SCHX may experience minor deviations in performance due to factors such as tracking methodology and trading costs.

Who Should Consider Investing:

• Investors seeking broad market exposure at a low cost.
• Individuals with a long-term investment horizon.
• Investors looking for a tax-efficient way to invest in the US stock market.

Fundamental Rating Based on AI: 8.5/10

The AI-based analysis indicates a strong fundamental outlook for SCHX. The ETF benefits from its low expense ratio, diversified portfolio, and consistent outperformance compared to its benchmark. However, investors should be aware of market-related risks and potential tracking errors.

Resources and Disclaimers:

This analysis is based on data sourced from ETF.com and Charles Schwab as of November 1, 2023.

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.