Should the Schwab 1000 Index ETF (SCHK) be on your investment radar?
Designed to provide broad exposure to the Large Cap Blend segment of the US stock market, the Schwab 1000 Index ETF (SCHK) is a passively managed exchange-traded fund launched on 11/10/2017.
The fund is sponsored by Charles Schwab. It has amassed over $ 2.31 billion in assets, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US stock market.
Why the large cap mix
Large-cap companies typically have a market cap of over $ 10 billion. Overall, they’re generally a stable option, with less risk and safer cash flow than mid- and small-cap companies.
Typically holding a mix of growth and value stocks, blended ETFs also exhibit the qualities of value and growth investing.
Cost is a big factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
This ETF’s annual operating expense is 0.05%, making it one of the cheapest products in the space.
It has a 12 month rolling dividend yield of 1.13%.
Sector exposure and main titles
It is important to delve into an ETF’s holdings before investing despite the many advantages of these types of funds, such as diversified exposure, which minimizes the risk associated with individual stocks. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the highest allocation to the IT sector, accounting for around 28.90% of the portfolio. Health care and consumer discretionary round out the top three.
Regarding individual holdings, Apple Inc Common Stock Usd.00001 (AAPL) accounts for approximately 5.45% of total assets, followed by Microsoft Corp Common Stock Usd.00000625 (MSFT) and Amazon.com Inc Common Stock Usd. 01 (AMZN).
The top 10 holdings represent approximately 25.31% of total assets under management.
Return and risk
SCHK seeks to match the performance of the Schwab 1000 Index before fees and expenses. The Schwab 1000 Index is a free float-adjusted market capitalization weighted index that includes the largest 1,000 stocks of publicly traded companies in the United States, with size determined by market capitalization. The Index is designed to measure the performance of US large and mid-cap stocks.
The ETF has added around 25.99% so far this year and has risen around 26.53% in the last year (as of 8/12/2021). Over the past 52 weeks, it has traded between $ 36.32 and $ 46.58.
The ETF has a beta of 1.02 and a standard deviation of 22.40% for the three-year period. With around 996 participations, it effectively diversifies the risk specific to the company.
Schwab 1000 Index ETF carries a Zacks ETF ranking of 3 (Hold), which is based on the expected return of the asset class, expense ratio and momentum, among other factors. Thus, SCHK is a sufficient option for those looking for exposure to the Style Box – Large Cap Blend area of the market. Investors might also consider other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While the iShares Core S&P 500 ETF has $ 329.66 billion in assets, the SPDR S&P 500 ETF has $ 428.70 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Passively managed ETFs are increasingly popular with institutional and retail investors due to their low cost, transparency, flexibility and tax efficiency. They are great vehicles for long term investors.
To learn more about this and other ETFs, search for products that match your investment goals, and read articles on the latest developments in the ETF investing world, please visit the Zacks ETF Center.
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ETF Schwab 1000 Index (SCHK): ETF Research Reports
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
IShares Core S&P 500 ETF (IVV): ETF Research Reports
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