Charles Schwab Corp. (ticker: SCHW) has made investing more accessible to retail and institutional investors since 1971. The company’s brokerage accounts make it easy to buy and sell stocks, but the firm also has several exchange-traded funds, or ETFs, available.
ETFs give investors exposure to numerous publicly traded companies under a single ticker symbol. Some of them follow benchmark indexes such as the S&P 500 and the Nasdaq, while others are customized to meet specific objectives.
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Buying ETFs offers several advantages over buying individual stocks and mutual funds. “Investing in ETFs can be an efficient way to diversify your portfolio and gain broad exposure to the assets within the ETF instead of purchasing each of the assets individually,” says Keith Jones, a certified financial planner and senior financial advisor at Empower. “You may prefer ETFs if you actively trade investments and want to be able to buy and sell ETFs throughout the market day. ETFs may also be right for you if it’s a priority to reduce your tax burden.”
Schwab ETFs are some of the best in the business, and these are some of the best ETFs that the brokerage firm offers its investors, alongside an analysis of similar offerings from competitors:
| Schwab ETF | Expense Ratio | 10-year annualized return* |
| Schwab US Large-Cap Growth ETF (SCHG) | 0.04% | 16.4% |
| Schwab US Large-Cap ETF (SCHX) | 0.03% | 13.0% |
| Schwab 1000 Index ETF (SCHK) | 0.05% | 15.1%** |
| Schwab US Broad Market ETF (SCHB) | 0.03% | 12.6% |
| Schwab US REIT ETF (SCHH) | 0.07% | 6.1% |
*As of Sept. 23.**Five-year return; 10-year return not available.
Schwab US Large-Cap Growth ETF (SCHG)
The Schwab US Large-Cap Growth ETF prioritizes (predictably) large-cap growth stocks, with Apple Inc. (AAPL), Microsoft Corp. (MSFT) and Nvidia Corp. (NVDA) each making up more than 10% of the fund’s total assets. Each of the Magnificent Seven stocks has a place in SCHG’s top 10 holdings, with Eli Lilly & Co. (LLY) and Broadcom Inc. (AVGO) as the other two in the top 10. (Both Alphabet Inc.’s (GOOG, GOOGL) Class A and Class C shares are represented).
The growth ETF has $32.4 billion in total assets and has four fund managers with an average tenure of seven years. SCHG has a lot going for it: an annualized return of 16.4% over the past decade, a 0.04% expense ratio and a modest trailing-12-month yield of 0.4% as of Sept. 23.
While SCHG has generated respectable returns, it falls short of Vanguard and Fidelity’s tech ETFs over the long run, however. The Vanguard Information Technology ETF (VGT) has achieved an annualized 20.4% return over the past 10 years, for example. Meanwhile, the Fidelity MSCI Information Tech ETF (FTEC) has delivered an annualized 20.2% return over the past decade.
This is because VGT and FTEC have been more heavily concentrated in the Magnificent Seven stocks, with Apple, Microsoft and Nvidia making up almost half of their respective assets. They have higher expense ratios though: VGT charges 0.1%, while FTEC costs 0.084%.
Schwab US Large-Cap ETF (SCHX)
The Schwab US Large-Cap ETF features 749 stocks from various sectors. While the tech sector is still overrepresented, it makes up only about one-third of the fund.
The Schwab US Large-Cap ETF prioritizes the Magnificent Seven as well, but Berkshire Hathaway Inc. (BRK.B) also made it into its top 10 holdings. Tesla Inc. (TSLA) is currently the 11th-largest holding in the ETF, making it the only Magnificent Seven stock not present in the top 10. SCHX has a 0.03% expense ratio and a trailing-12-month yield of 1.2%. The fund has an annualized 13% return over the past 10 years as of Sept. 23.
SCHX, which has the same fund managers as SCHG, has underperformed the Fidelity Enhanced Large Cap Growth ETF (FELG), which has an annualized 15.5% return over the past decade. FELG has a higher 0.18% expense ratio, however, with a higher concentration in the Magnificent Seven stocks. Schwab’s ETF has also underperformed the Vanguard Growth ETF (VUG), which has an annualized 15.5% return over the past decade and a 0.04% expense ratio.
Schwab 1000 Index ETF (SCHK)
The Schwab 1000 Index ETF gives investors exposure to the 1,000 largest U.S. stocks by market cap. Most of the Magnificent Seven stocks are in the top 10 holdings, with Tesla as the 11th-largest holding. The top 10 get 31% of the ETF’s total assets.
Under the same management team as SCHX and SCHG, SCHK has a 0.05% expense ratio and a trailing-12-month yield of 1.2%. The fund has a five-year annualized return of 15.1%.
SCHK has nearly matched the five-year return of the Vanguard Large-Cap ETF (VV), at 15.6%. But not to be outdone, the Fidelity Enhanced Large Cap Core ETF (FELC) has delivered an annualized 16.3% return over the past five years.
Schwab US Broad Market ETF (SCHB)
The Schwab US Broad Market ETF has a 0.03% expense ratio and a trailing-12-month yield of 1.2%. It has an annualized 12.6% return over the past decade as of Sept. 23 and offers exposure to more than 2,400 equities.
The top 10 holdings make up 30% of the fund’s total assets, and the Magnificent Seven stocks have their places in the lineup. That’s been a common theme for many Schwab, Fidelity and Vanguard ETFs. True to form, tech stocks make up almost one-third of the fund’s total assets.
SCHB’s stats are very comparable to those of the Vanguard Total Stock Market Index Fund ETF (VTI). VTI has a 0.03% expense ratio and has delivered an annualized 12.6% return over the past decade. The fund’s shorter-term returns are similar, but SCHD slightly edges out VTI with a three-year return of 8.8%, compared with VTI’s 8.7%.
Schwab US REIT ETF (SCHH)
The Schwab US REIT ETF has more than 100 holdings, and its top 10 stocks make up almost half of the total portfolio. Prologis Inc. (PLD), American Tower Corp. (AMT) and Equinix Inc. (EQIX) are the top three holdings that make up more than 21% of the fund’s total assets. This REIT ETF has a 0.07% expense ratio.
SCHH has $8.1 billion in total assets and a trailing-12-month yield of 2.9%. It has an annualized 6.1% return over the past 10 years, and a one-year return of 33.9%. That edges out the 33.1% one-year return of Vanguard Real Estate ETF (VNQ), which has delivered a 7.4% annualized return over the past 10 years. The Fidelity MSCI Real Estate Index ETF (FREL) has also slightly underperformed SCHH over the past year, with a 33.2% return, as well as on a three-year basis.
All three fund providers’ ETFs have Prologis, American Tower and Equinix as their top three holdings. The difference, as in other ETF mashups, is that the Schwab fund is more heavily concentrated in those top three holdings than the Fidelity and Vanguard funds. The bigger these funds have bet on the winners, the better their returns have looked; but don’t forget, past performance does not guarantee similar future returns.
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5 Best Schwab ETFs to Buy and Hold originally appeared on usnews.com
