ETFs
Should the Schwab 1000 Index ETF (SCHK) be on your investment radar?
Launched on 10/11/2017, the Schwab 1000 Index ETF (SCHK) is a passively managed exchange-traded fund designed to provide broad exposure to the Large Cap Blend segment of the U.S. equity market.
The fund is sponsored by Charles Schwab. It has accumulated assets of over $3.68 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the U.S. stock market.
Why a mix of large caps?
Companies in the large-cap category typically have a market capitalization greater than $10 billion. They tend to be stable businesses with predictable cash flows and are generally less volatile than mid- and small-cap companies.
Blended ETFs are aptly named because they tend to hold a mix of growth and value stocks, and also exhibit characteristics of both types of stocks.
Costs
Since cheaper funds tend to perform better than more expensive funds, assuming all other factors remain equal, it’s important for investors to pay attention to an ETF’s expense ratio.
The annual operating expenses of this ETF are 0.05%, making it one of the cheapest products in the sector.
Its 12-month rolling dividend yield is 1.23%.
Sector exposure and main holdings
It is important to carefully review the assets of an ETF before investing, despite the many advantages of this type of fund, such as diversified exposure, which minimizes the risk associated with a single stock. In addition, most ETFs are very transparent products that disclose their assets daily.
This ETF is primarily dedicated to the information technology sector, which represents approximately 28.20% of the portfolio. The financial and healthcare sectors round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 6.34% of total assets, followed by Apple Inc (AAPL) and Nvidia Corp (NVDA).
The top 10 stocks represent approximately 31% of total assets under management.
Performance and risk
SCHK seeks to match the performance of the Schwab 1000 Index before fees and expenses. The Schwab 1000 Index is a float-adjusted market capitalization-weighted index that includes the 1,000 largest publicly traded stocks in the United States, with size determined by market capitalization. The Index is designed to measure the performance of large- and mid-capitalization U.S. stocks.
The ETF has gained about 16.91% year-to-date and is up about 26.58% over the past year (as of 12/07/2024). Over the past 52 weeks, it has traded between $39.52 and $53.85.
The ETF has a beta of 1.02 and a standard deviation of 17.53% over the past three years. With approximately 994 stocks, it effectively diversifies the risk specific to each company.
The story continues
Alternatives
The Schwab 1000 Index ETF is ranked 3 (Hold) by Zacks, which is based on the asset class’s expected return, expense ratio and momentum, among other factors. Thus, SCHK is a reasonable option for those seeking exposure to the Style Box – Large Cap Blend sector of the market. Investors may also want to consider other ETF options in this area.
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 $504.25 billion in assets, the SPDR S&P 500 ETF has $547.93 billion. The IVV has an expense ratio of 0.03% and the SPY charges 0.09%.
Conclusion
Individual and institutional investors are increasingly turning to passively managed ETFs because they offer low costs, transparency, flexibility and tax efficiency; these types of funds are also excellent vehicles for long-term investors.
To learn more about this and other ETFs, find products that match your investment goals, and read articles on the latest developments in the ETF investment universe, visit Zacks ETF Center.
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Schwab 1000 Index ETF (SCHK): ETF Research Reports
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports