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 an array of 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 (NAV)* | % of Assets in Top 10 Holdings |
| Schwab US Large-Cap Growth ETF (SCHG) | 0.04% | 16.8% | 54% |
| Schwab US Large-Cap ETF (SCHX) | 0.03% | 13.3% | 33% |
| Schwab 1000 Index ETF (SCHK) | 0.05% | 15.6%** | 32% |
| Schwab US Broad Market ETF (SCHB) | 0.03% | 12.9% | 31% |
| Schwab US REIT ETF (SCHH) | 0.07% | 4.6% | 47% |
*As of Nov. 11**Five-year return; 10-year data not available.
Schwab US Large-Cap Growth ETF (SCHG)
The Schwab US Large-Cap Growth ETF prioritizes (predictably) large-cap growth stocks, with Nvidia Corp. (NVDA) and Apple Inc. (AAPL) each making up more than 10% of the fund’s total assets. Microsoft Corp. (MSFT) claims more than 9% of the fund. Each of the Magnificent Seven stocks has a place in SCHG’s top 10 holdings, with Eli Lilly and 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 $35.8 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 16.8% over the past decade, a 0.04% expense ratio and a modest trailing-12-month yield of 0.4% as of Oct. 31.
While SCHG has generated respectable returns, it falls short of some key Vanguard and Fidelity tech ETFs over the long run. The Vanguard Information Technology ETF (VGT) has achieved an annualized 21% return over the past 10 years, for example. Meanwhile, the Fidelity MSCI Information Tech ETF (FTEC) has delivered an annualized 20.8% 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 753 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. SCHX has a 0.03% expense ratio and a trailing-12-month yield of 1.2%.
The fund has an annualized 13.3% return over the past 10 years as of Nov. 11. SCHX, which has the same fund managers as SCHG, has underperformed the Fidelity Enhanced Large Cap Growth ETF (FELG), which has an annualized 15.9% 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 15.8% return over the past decade and a 0.04% expense ratio.
[See: 7 Best ETFs to Buy Now.]
Schwab 1000 Index ETF (SCHK)
The Schwab 1000 Index ETF gives investors exposure to the 1,000 largest U.S. stocks by market cap. The Magnificent Seven stocks are in the top 10 holdings, with Broadcom and Berkshire Hathaway also making the list.
The top 10 get 32% 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 15.6%.
SCHK has nearly matched the five-year return of the Vanguard Large-Cap ETF (VV), at 16%. But not to be outdone, the Fidelity Enhanced Large Cap Core ETF (FELC) has delivered an annualized 16.8% 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 12.9% return over the past decade as of Nov. 11 and offers exposure to 2,471 equities.
The top 10 holdings make up 31% 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 32% of the fund’s total assets.
SCHB’s stats are 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 12.9% return over the past decade. The funds’ shorter-term returns are similar, but SCHD slightly edges out VTI with a three-year return of 9.2%, compared with VTI’s 9.1%.
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, and they make up more than 20% of the fund’s total assets.
This REIT ETF has a 0.07% expense ratio. SCHH has $7.9 billion in total assets and a trailing-12-month yield of 3%. It has a 4.6% annualized return over the past 10 years and a one-year return of 30.8%. That’s a bit lower than the 31.5% one-year return of Vanguard Real Estate ETF (VNQ), which has delivered a 6% annualized return over the past 10 years. The Fidelity MSCI Real Estate Index ETF (FREL) has also outperformed SCHH over the past year with a 31.5% return.
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 all these funds have bet on the winners, the better their returns have looked, while a higher concentration in underperforming stocks has dinged some funds. But don’t forget, past performance does not guarantee similar future returns.
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5 Best Schwab ETFs to Buy Now originally appeared on usnews.com
Update 11/12/24: This story was previously published at an earlier date and has been updated with new information.
