Yahoo Finance Should Schwab U.S. Mid-Cap ETF (SCHM) Be on Your Investing Radar?
Looking for broad exposure to the Mid Cap Blend segment of the US equity market? You should consider the Schwab U.S. Mid-Cap ETF (SCHM), a passively managed exchange traded fund launched on 01/13/2011.
The fund is sponsored by Charles Schwab. It has amassed assets over $9.02 billion, making it one of the larger ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
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 1.70%.
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 Industrials sector--about 19.20% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
Looking at individual holdings, Biomarin Pharmaceutical Inc (BMRN) accounts for about 0.55% of total assets, followed by Aes Corp (AES) and Westinghouse Air Brake Technologie (WAB).
The top 10 holdings account for about 5.05% of total assets under management.
Performance and Risk
SCHM seeks to match the performance of the Dow Jones U.S. Mid-Cap Total Stock Market Index before fees and expenses. The Dow Jones U.S. Mid-Cap Total Stock Market Index is a float-adjusted market capitalization weighted index. The Index includes the mid-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace and includes the components ranked 501-1000 by full market capitalization.
The ETF has lost about -2.09% so far this year and is down about -12.79% in the last one year (as of 03/20/2023). In the past 52-week period, it has traded between $60.50 and $77.87.
The ETF has a beta of 1.13 and standard deviation of 25.46% for the trailing three-year period, making it a medium risk choice in the space. With about 503 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab U.S. Mid-Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SCHM is a reasonable option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH) track a similar index. While Vanguard Mid-Cap ETF has $49.63 billion in assets, iShares Core S&P Mid-Cap ETF has $63.11 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.
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Schwab U.S. Mid-Cap ETF (SCHM): ETF Research Reports
BioMarin Pharmaceutical Inc. (BMRN) : Free Stock Analysis Report
The AES Corporation (AES) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
Vanguard Mid-Cap ETF (VO): ETF Research Reports