Should Schwab U.S. Large-Cap Value ETF (SCHV) Be on Your Investing Radar?

The Schwab U.S. Large-Cap Value ETF (SCHV) is designed to give investors broad access to the Large Cap Value segment of the U.S. equity market. Launched on December 11, 2009, this passively managed exchange-traded fund is sponsored by Charles Schwab.

It has accumulated assets totaling over $11.54 billion, making it one of the largest ETFs in the Large Cap Value space.

Understanding Large Cap Value

Large cap companies are those with market capitalizations exceeding $10 billion. These companies usually demonstrate stability, provide predictable cash flows, and tend to be less variable compared to mid and small cap companies.

Value stocks, which typically showcase below average price-to-earnings and price-to-book ratios, are fundamental to this fund. These stocks generally exhibit lower sales and earnings growth rates. Historically, value stocks have outperformed growth stocks in various market conditions, although they may underperform growth stocks during strong market rallies.

Cost Considerations

Investors need to consider an ETF's expense ratio, as lower-cost options often yield better returns than their pricier counterparts under similar conditions.

The Schwab U.S. Large-Cap Value ETF has an impressively low annual operating expense ratio of 0.04%, making it one of the cost-efficient choices in its category. Additionally, it boasts a 12-month trailing dividend yield of 2.28%.

Sector Distribution and Key Holdings

Before making an investment, it is crucial to examine the ETF's holdings. While these funds offer diversified exposure that lowers single stock risk, they also provide transparency since most ETFs disclose their holdings daily.

This particular ETF has a significant allocation towards the Financials sector, which composes approximately 22.80% of its portfolio. The top three sectors also include Industrials and Healthcare.

In terms of individual investments, Berkshire Hathaway Inc Class B (BRK/B) makes up about 3.45% of total assets, followed by J.P. Morgan Chase (JPM) and Exxon Mobil Corp (XOM). The top 10 holdings combine to represent around 18.48% of the total assets under management.

Performance and Risk Profile

SCHV aims to replicate the performance of the Dow Jones U.S. Large-Cap Value Total Stock Market Index, prior to fees and expenses. This index specifically includes the large-cap value portion of the broader U.S. Total Stock Market Index.

So far this year, the ETF has experienced a loss of about -1.15% but has seen a positive gain of roughly 13.01% in the last 12 months (as of January 13, 2025). Over the previous year, it has fluctuated in price between $22.94 and $28.11.

The ETF’s beta stands at 0.94 with a standard deviation of 14.78% over the trailing three-year period, which positions it as a medium risk investment. With around 528 distinct holdings, it effectively minimizes company-specific investment risks.

Alternative Investment Options

With a Zacks ETF Rank of 2 (Buy), the Schwab U.S. Large-Cap Value ETF is an appealing option for investors wanting exposure to the Large Cap Value segment. There are additional ETFs worth considering such as the Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard Value ETF (VTV). The Schwab U.S. Dividend Equity ETF currently holds assets amounting to $65.19 billion, while Vanguard Value ETF has assets reaching $127.21 billion. SCHD has an expense ratio of 0.06%, whereas VTV charges 0.04%.

Final Thoughts

Increasingly, both retail and institutional investors are gravitating towards passively managed ETFs due to their low costs, transparency, flexibility, and tax efficiency. These types of funds serve as excellent options for those investing with a long-term perspective.

For further insights into this product and various other ETFs, consider exploring resources that align with your investment goals.

ETF, Investing, Finance