For investors seeking momentum, Schwab U.S. Small-Cap ETF (SCHA - Free Report) is probably on radar now. The fund just hit a 52-week high and is up 23% from its 52-week low price of $53.53/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
SCHA in Focus
This ETF offers exposure to the small cap segment of the broad U.S. stock market. It holds a large basket of 1,772 stocks with none holding more than 0.23% of assets. From a sector look, the fund is also well diversified with financials, information technology, industrials, healthcare and consumer discretionary making up for the top five sectors. The fund charges investors 5 basis points a year in fees (see: all the Small Cap ETFs here).
Why the Move?
The small cap space has been an area to watch lately given high hopes of tax reform, which is expected by the end of the year. If Congress approves the corporate tax rate cut from 35% to 15% as President Trump has proposed, small caps with a median effective tax rate of 31.9% will be the biggest beneficiaries. Additionally, lofty large-cap valuation, North Korea tension and chances of an end to the cheap monetary policy era across the globe have added to the strength in small-cap stocks. Notably, these pint-sized stocks are free from the clutches of any political malaise or a strong greenback.
More Gains Ahead?
Currently, SCHA has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank, so there is definitely some promise for those who want to ride this surging ETF a little further.
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