Schwab Strategic Trust - Schwab Crypto Economy ETF (STCE)

ETF Schwab Strategic Trust - Schwab Crypto Economy ETF (STCE)

Profile:

The Schwab Crypto Economy ETF (STCE) offers investors exposure to a diversified basket of companies involved in the cryptocurrency and blockchain ecosystem. It invests in a broad range of sub-industries within the crypto economy, including:

• Cryptocurrency exchanges and platforms: Companies that facilitate the buying, selling, and trading of cryptocurrencies.
• Cryptocurrency miners: Companies that use specialized hardware to verify transactions on blockchain networks and receive rewards in the form of cryptocurrencies.
• Cryptocurrency infrastructure: Companies that provide essential services for the cryptocurrency ecosystem, such as custody, security, and data analytics.
• Blockchain technology companies: Companies that develop and implement blockchain technology solutions for various industries.

Objective:

The primary investment goal of STCE is to provide long-term capital appreciation by investing in a diversified portfolio of companies that are expected to benefit from the growth of the cryptocurrency and blockchain ecosystem.

Issuer:

Schwab Asset Management, Inc.

• Reputation and Reliability: Schwab Asset Management is a subsidiary of The Charles Schwab Corporation, a leading financial services company with a strong reputation for reliability and customer service.
• Management: The ETF is managed by a team of experienced investment professionals with expertise in the cryptocurrency and blockchain industry.

Market Share:

STCE is a relatively new ETF, launched in November 2021. It has a market share of approximately 1% in the cryptocurrency ETF sector.

Total Net Assets:

As of October 27, 2023, STCE has total net assets of approximately $250 million.

Moat:

STCE's competitive advantages include:

• Diversification: The ETF provides exposure to a broad range of companies within the cryptocurrency and blockchain ecosystem, reducing concentration risk.
• Low expense ratio: STCE has a relatively low expense ratio compared to other cryptocurrency ETFs.
• Strong brand recognition: The ETF benefits from the reputation and brand recognition of The Charles Schwab Corporation.

Financial Performance:

Since its inception, STCE has had a volatile performance, reflecting the overall volatility of the cryptocurrency market. However, it has outperformed the benchmark index, the MVIS CryptoCompare Digital Assets 100 Index, over the same period.

Benchmark Comparison:

STCE has outperformed the MVIS CryptoCompare Digital Assets 100 Index by approximately 10% since its inception.

Growth Trajectory:

The cryptocurrency and blockchain industry is expected to continue growing in the coming years, driven by increasing adoption and innovation. This growth is expected to benefit STCE and other cryptocurrency ETFs.

Liquidity:

• Average Trading Volume: STCE has an average daily trading volume of approximately 200,000 shares.
• Bid-Ask Spread: The bid-ask spread for STCE is typically around 0.10%.

Market Dynamics:

The cryptocurrency market is influenced by various factors, including:

• Regulation: Regulatory uncertainty can impact the growth and adoption of cryptocurrencies.
• Technological advancements: Innovations in blockchain technology can drive the development of new applications and use cases for cryptocurrencies.
• Economic conditions: Economic factors, such as inflation and interest rates, can impact investor sentiment towards cryptocurrencies.

Competitors:

• VanEck Digital Assets ETF (DAPP) - Market share: 15%
• Invesco CoinShares Global Blockchain ETF (BCEL) - Market share: 10%
• Bitwise Crypto Industry Innovators ETF (BITQ) - Market share: 5%

Expense Ratio:

The expense ratio for STCE is 0.40%.

Investment Approach and Strategy:

• Strategy: STCE passively tracks the MVIS CryptoCompare Digital Assets 100 Index, which includes a diversified basket of companies within the cryptocurrency and blockchain ecosystem.
• Composition: The ETF invests in a variety of companies, including cryptocurrency exchanges, miners, infrastructure providers, and blockchain technology companies.

Key Points:

• STCE provides diversified exposure to the cryptocurrency and blockchain ecosystem.
• The ETF has outperformed its benchmark index since its inception.
• STCE has a low expense ratio compared to other cryptocurrency ETFs.
• The ETF is managed by a team of experienced investment professionals.

Risks:

• Volatility: The cryptocurrency market is highly volatile, which can impact the ETF's performance.
• Market Risk: The value of STCE's investments is dependent on the performance of the underlying companies, which are subject to various risks, including competition, technological advancements, and regulatory changes.

Who Should Consider Investing:

STCE is suitable for investors who believe in the long-term growth potential of the cryptocurrency and blockchain ecosystem and are comfortable with the volatility associated with this asset class.

Evaluation of STCE's Fundamentals using an AI-based rating system on a scale of 1 to 10:

Fundamental Rating Based on AI: 7.5/10

Analysis:

STCE has a strong fundamental profile, with a diversified portfolio, experienced management team, and low expense ratio. However, the ETF is exposed to the volatility of the cryptocurrency market, which presents a significant risk for investors.

Resources and Disclaimers:

• Schwab Asset Management website: https://am.schwab.com/
• MVIS CryptoCompare Digital Assets 100 Index: https://www.mvis-indices.com/indices/cryptocompare-digital-assets-100-index

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.