If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the Schwab U.S. LargeCap Growth ETF (
SCHG Quick Quote SCHG - Free Report) , a passively managed exchange traded fund launched on 12/11/2009.
The fund is sponsored by Charles Schwab. It has amassed assets over $14.53 billion, making it one of the largest ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.04%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 64.80% of the portfolio. Telecom and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (
AAPL Quick Quote AAPL - Free Report) accounts for about 13.97% of total assets, followed by Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) and Amazon Com Inc ( AMZN Quick Quote AMZN - Free Report) .
The top 10 holdings account for about 56.47% of total assets under management.
Performance and Risk
SCHG seeks to match the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index before fees and expenses. The Dow Jones U.S. Large-Cap Growth Total Stock Market Index is float-adjusted market-capitalization weighted and includes the large-cap growth portion of the Dow Jones U.S. Total Stock Market Index.
The ETF has lost about -24.49% so far this year and is down about -20.71% in the last one year (as of 09/08/2022). In the past 52-week period, it has traded between $55.73 and $83.40.
The ETF has a beta of 1.10 and standard deviation of 28.12% for the trailing three-year period, making it a medium risk choice in the space. With about 228 holdings, it effectively diversifies company-specific risk.
Schwab U.S. LargeCap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SCHG is an excellent option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (
VUG Quick Quote VUG - Free Report) and the Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $73.56 billion in assets, Invesco QQQ has $164.43 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit
Zacks ETF Center.