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$Schwab U.S. Large-Cap Growth ETF(SCHG)$ 🔺LONG TERM🔺🚀🧑‍🧑‍🧒‍🧒🧑‍🧒‍🧒👶👧🧒👦  

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

SCHG: A Worthy QQQ Alternative

Jun. 13, 2024 7:18 AM ETSchwab U.S. Large-Cap Growth ETF™ (SCHG)QQQ, SCHW, TQQQ, AAPL, NVDA, AMZN, META, GOOGL, GOOG, LLY, AVGO, TSLA8 Comment

By A.J. Button

The Schwab U.S. Large-Cap Growth ETF is an excellent alternative to the Invesco QQQ Trust.

Its holdings overlap the QQQ's to a considerable degree, but with a much lower fee, and exposure to financials.

This makes sense because the Dow Jones Large Cap Growth Index is very similar to the NASDAQ-100.

It is, however, less covered, and Schwab Large-Cap Growth is less widely traded than the Invesco QQQ trust. It has a higher spread.

For those with long-term holding periods, SCHG's lower fees make a compelling case for investing.

The fund is sponsored by Charles Schwab. It has amassed assets over $28.34 billion, making it one of the largest ETFs attempting to match the Large Cap Growth segment of the US equity market.

Why Large Cap Growth

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

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 0.45%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 46.40% of the portfolio. Telecom and Healthcare round out the top three.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 12.24% of total assets, followed by Apple Inc (AAPL) and Nvidia Corp (NVDA).

The top 10 holdings account for about 61.61% of total assets under management.

Performance and Risk

SCHG seeks to match the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index before fees and expenses. The Dow Jones U.S. Large-Cap Growth Total Stock Market Index is float-adjusted market-capitalization weighted and includes the large-cap growth portion of the Dow Jones U.S. Total Stock Market Index.

The ETF has added roughly 11.90% so far this year and it's up approximately 23.65% in the last one year (as of 08/06/2024). In the past 52-week period, it has traded between $70.08 and $105.69.

The ETF has a beta of 1.11 and standard deviation of 23.30% for the trailing three-year period, making it a medium risk choice in the space. With about 251 holdings, it effectively diversifies company-specific risk.

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