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Should Schwab U.S. Large-Cap Growth ETF (SCHG) Be on Your Investing Radar?

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Looking for broad exposure to the Large Cap Growth segment of the US equity market? You should consider the Schwab U.S. Large-Cap Growth ETF (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 $15.53 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 fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

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. Also, growth stocks are a type of equity that carries more risk compared to others. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.

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 0.04%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.49%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 48.40% of the portfolio. Healthcare and Consumer Discretionary round out the top three.

Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 12.98% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .

The top 10 holdings account for about 48.47% 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 added about 12.42% so far this year and is down about -10.41% in the last one year (as of 03/17/2023). In the past 52-week period, it has traded between $54.19 and $76.73.

The ETF has a beta of 1.09 and standard deviation of 26.95% for the trailing three-year period, making it a medium risk choice in the space. With about 247 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. Large-Cap Growth 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, SCHG is a good option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Growth ETF (VUG - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $77.70 billion in assets, Invesco QQQ has $164.13 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

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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