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Should Schwab U.S. LargeCap ETF (SCHX) Be on Your Investing Radar?

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Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Schwab U.S. LargeCap ETF (SCHX - Free Report) is a passively managed exchange traded fund launched on 11/03/2009.

The fund is sponsored by Charles Schwab. It has amassed assets over $29.41 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies 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.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

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 0.03%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.63%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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 27.30% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.78% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .

The top 10 holdings account for about 26.15% of total assets under management.

Performance and Risk

SCHX seeks to match the performance of the Dow Jones U.S. Large-Cap Total Stock Market Index before fees and expenses. The Dow Jones U.S. Large-Cap Total Stock Market measures all U.S. equity securities with readily available prices. The index includes approximately the largest 750 stocks and is float-adjusted market-capitalization weighted.

The ETF has lost about -19.60% so far this year and is down about -17.03% in the last one year (as of 11/02/2022). In the past 52-week period, it has traded between $42.25 and $57.29.

The ETF has a beta of 1.01 and standard deviation of 25% for the trailing three-year period, making it a medium risk choice in the space. With about 756 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. LargeCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SCHX is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV - Free Report) and the SPDR S&P 500 ETF (SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $293.47 billion in assets, SPDR S&P 500 ETF has $366.81 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.

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