Charles Schwab Asset Management Celebrates 15-Year ETF Anniversary: 3 ETFs to Watch

Schwab U.S. Dividend Equity ETF

SCHD

+0.32%

No discussion of Charles Schwab ETFs would be complete without mentioning SCHD, which has amassed over $63 billion in assets under management. This impressive growth is largely due to its robust methodology combined with cost-effectiveness.

With a low expense ratio of just 0.06%, SCHD tracks the Dow Jones U.S. Dividend 100 Index. This index starts with the identification of stocks that have maintained at least ten consecutive years of dividend payments.

Then, stocks are evaluated on four key fundamental factors: free cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate. This comprehensive analysis ensures that only financially healthy and reliable dividend payers are included.

The top 100 stocks meeting these criteria are then equally weighted to form the index. This equal weighting helps to mitigate risk and prevent any single stock from dominating the portfolio. The index undergoes quarterly rebalancing and an annual reconstitution.

Schwab U.S. Broad Market ETF

SCHB

-0.11%

The arena of broad market U.S. ETFs has traditionally been dominated by two major players: the iShares Core S&P Total US Stock Market ETF

Both of these funds charge a minimal fee of 0.03% to provide market cap-weighted exposure to a comprehensive range of U.S. stocks across small, mid, and large-cap sectors.

Now, I'm adding a third contender to this list with SCHB which also charges a 0.03% expense ratio and boasts just under $32 billion in assets under management.

SCHB tracks the Dow Jones U.S. Broad Stock Market Index, encompassing thousands of stocks, and is notable for its high tax efficiency with an annual turnover of just 3.33%.

Interestingly, this is the same index that VTI used through April 22, 2005, before it switched to the MSCI US Broad Market Index through June 2, 2013, and later to the CRSP US Total Market Index.

Schwab U.S. Large-Cap ETF

SCHX

-0.11%

In the realm of large-cap passive beta investing, the space has traditionally been dominated by S&P 500 ETFs and Russell 1000 ETFs, primarily offered by industry giants like Vanguard, iShares, and State Street.

Yet, I'm introducing another strong contender into the mix with the SCHX, which tracks the Dow Jones U.S. Large-Cap Total Stock Market Index.

To differentiate, the S&P 500 includes 500 large-cap companies selected through a combination of earnings, size criteria, and decisions by a committee that introduces a subjective element to the selection process.

The Russell 1000, meanwhile, represents the 1000 largest U.S. stocks measured by float-adjusted market capitalization, which only considers shares available to the public and excludes closely held shares.

In contrast, SCHX's index methodology is even simpler. It includes the 750 largest U.S. companies based on full market capitalization, which considers the total value of all issued shares of a publicly traded company.

This approach differs from float-adjusted because it encompasses all shares, including those held by insiders, governments, and other restricted entities, providing a broader view of the company's total market value.

SCHX embodies all the benefits of low-cost indexing, featuring an expense ratio of just 0.03% and minimal portfolio turnover at 3.45%. This ETF is an excellent option for investors seeking straightforward, cost-effective exposure to the large-cap segment of the U.S. market.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.