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

Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Schwab U.S. Large-Cap Value ETF (SCHV) is a passively managed exchange traded fund launched on 12/11/2009.

The fund is sponsored by Charles Schwab. It has amassed assets over $9.24 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.04%, making it the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.57%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 16% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Class B (BRKB) accounts for about 2.88% of total assets, followed by Exxon Mobil Corp (XOM) and Johnson & Johnson (JNJ).

The top 10 holdings account for about 18.38% of total assets under management.

Performance and Risk

SCHV seeks to match the performance of the Dow Jones U.S. Large-Cap Value Total Stock Market Index before fees and expenses. The Dow Jones U.S. Large-Cap Value Total Stock Market Index is a float-adjusted market capitalization weighted index containing the large-cap value portion of the Dow Jones U.S. Total Stock Market Index.

The ETF has lost about -2.85% so far this year and is down about -4.05% in the last one year (as of 06/02/2023). In the past 52-week period, it has traded between $58.51 and $69.30.

The ETF has a beta of 0.94 and standard deviation of 16.96% for the trailing three-year period, making it a medium risk choice in the space. With about 519 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab U.S. Large-Cap Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SCHV is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $48.60 billion in assets, Vanguard Value ETF has $98.78 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Schwab U.S. Large-Cap Value ETF (SCHV): ETF Research Reports

Johnson & Johnson (JNJ) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Vanguard Value ETF (VTV): ETF Research Reports

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

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Zacks Investment Research

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