A sound investment process and strong management team underpin Schwab Long-Term US Treasury ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in securitized debt and AA rated bonds compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Schwab Long-Term US Treasury ETF earns an Above Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. 

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to track as closely as possible, before fees and expenses, the total return of the Bloomberg US Long Treasury Index.  To pursue its goal, the fund generally invests in securities that are included in the index. The index includes all publicly issued, U.S. Treasury securities that have a remaining maturity of ten or more years, are rated investment grade, and have $300 million or more of outstanding face value. It is the fund's policy that under normal circumstances it will invest at least 90% of its net assets (including, for this purpose, and any borrowings for investment purposes) in securities included in the index.  

 This strategy's 12-month yield is 4.0%, which mirrors its average peer. Plus, it has a 4.5% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated AA. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 15.5-year duration, is expected to gain 15.5% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Above Average

Process

Schwab Long-Term US Treasury ETF's strong team drives the strategy's Above Average People Pillar rating. There are two managers listed on the fund: Matthew Hastings, Mark McKissick. Experience on the team is abundant, with over 25 years of average portfolio management experience. Together, they manage a total of five strategies, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

Under new but familiar leadership, Schwab Asset Management Solutions maintains its Above Average Parent Pillar rating. 

After the former Schwab CEO was named president of parent Charles Schwab Corporation in 2022, Omar Aguilar, a Schwab CIO since 2011, was promoted to CEO while retaining his CIO role. Under Aguilar's leadership, Schwab remains focused on core-oriented strategies: More than 95% of the firm's fund assets under management are in low-cost index products that are suitable for the biggest portions of investors' portfolios. Index-tracking remains are par with the best teams in the business.

Recent strategic initiatives show a desire to grow in an increasingly competitive landscape. Forays into direct indexing—which customizes separate accounts through tax-loss harvesting, values-based requests, or other client preferences—as well as some new launches, such as Schwab Municipal Bond ETF, fit the firm's strategic focus and are natural extensions of its capabilities. However, other recent launches in more-niche asset classes, including Schwab Crypto Thematic ETF, contrast previous refusals to enter trendy markets. 

Schwab benefits from its association with its parent's brokerage business. This arrangement and efficient operation allow funds to grow quickly and keep fees in line with larger competitors. Historically, Schwab has been quick to match competitor fee cuts and now sports a 0.09% asset-weighted average fee across its mutual funds and ETFs.

Parent

Schwab Long-Term US Treasury ETF

SCHQ tracks a market-value weighted Index of U.S. Investment-grade Treasury bonds with remaining maturities of 10 years or more.

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BlackRock Enhanced Government Fund

iShares U.S. Fixed Income Balanced Risk Factor ETF

Goldman Sachs TreasuryAccess 0-1 Year ETF

iShares U.S. Treasury Bond ETF

iShares 25+ Year Treasury STRIPS Bond ETF

Invesco Ultra Short Duration ETF

iShares 7-10 Year Treasury Bond ETF

iShares 3-7 Year Treasury Bond ETF

First Trust Long Duration Opportunities ETF

ProShares UltraShort 7-10 Year Treasury

Schwab Short-Term US Treasury ETF

Schwab Intermediate-Term US Treasury ETF

iShares Short Treasury Bond ETF

iShares 1-3 Year Treasury Bond ETF

SPDR Portfolio Long Term Treasury ETF

SPDR Portfolio Short Term Treasury ETF

Proshares Short 20+ Year Treasury

ProShares UltraShort 20+ Year Treasury

ProShares Short 7-10 Year Treasury

iShares 10-20 Year Treasury Bond ETF

iShares 20+ Year Treasury Bond ETF

Direxion Daily 20+ Year Treasury Bull 3X Shares

It generally takes a few years for changes in Federal Reserve rates to fully impact bond fund dividends. Bond funds are still benefitting from prior rate hikes. Perhaps by enough to cancel out any future rate cuts. By my estimations, and under current Fed guidance, most bond funds would only start to see declining dividends in 2025, at the earliest.

Estimating The Impact Of Lower Rates On Bond Fund Dividends

The Schwab Long-Term US Treasury (SCHQ) and the iShares 20+ Year Treasury Bond (TLT) ETFs have jumped sharply in the past few months as investors cheer the change of tune from the Federal Reserve.

A fiscal cliff is coming: avoid the SCHQ and TLT ETFs

Vanguard Long-Term Treasury ETF

BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF

The article discusses the merits of investing in long-term bonds in 2024 and recommends alternatives to the iShares 20 Plus Year Treasury Bond ETF. The SPDR Portfolio Long Term Treasury ETF is compared to other long-term treasury bond ETFs, highlighting its lower credit rating compared to Vanguard's VGLT.

Comparing Long-Term Treasury ETFs: TLT, VGLT, SPTL, SCHQ, XTWY

Schwab 5-10 Year Corporate Bond ETF

Schwab 1-5 Year Corporate Bond ETF

Schwab US TIPS ETF

Charles Schwab

Schwab US Aggregate Bond ETF

Schwab Municipal Bond ETF

Schwab High Yield Bond ETF

WESTLAKE, Texas--(BUSINESS WIRE)--Schwab Asset Management™, the asset management arm of The Charles Schwab Corporation and the fifth-largest provider1 of ETFs, today announced the reduction of operating expense ratios for the Schwab High Yield Bond ETF (SCYB) and the Schwab U.S. TIPS ETF (SCHP), bringing the fees for Schwab Asset Management's entire lineup of fixed income ETFs to only three basis points. All of Schwab Asset Management's fixed income ETFs are now among the lowest-priced ETFs in.

Schwab Asset Management Reduces Fees on Two Fixed Income ETFs, Pricing Its Entire Fixed Income Lineup at Three Basis Points

JPMorgan BetaBuilders 1-5 Year US Aggregate Bond ETF

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iShares MSCI Japan ETF

ClearShares Ultra-Short Maturity ETF

Invesco 1-30 Laddered Treasury ETF

Invesco QQQ

ProShares Inflation Expectations ETF

iShares 0-3 Month Treasury Bond ETF

The market is showing signs of weakness and lacks sustainable upside momentum. The recent sell-off has broken key moving averages, indicating a potential shift in market sentiment.

Selling Time? Oil, Inflation, Debt Concerns And A T-Bill Portfolio

Record Short Position In Treasuries - Are Hedge Funds Betting On The U.S. Default?.

Record Short Position In Treasuries - Are Hedge Funds Betting On The U.S. Default?

SCHQ owns a portfolio of U.S. treasuries with a weighted average maturity year of 23.2 years. The fund has an average yield to maturity of 4.08%.

SCHQ: Accumulate This And Average Down On Weakness

JPMorgan BetaBuilders Europe ETF

Xtrackers MSCI Europe Hedged Equity ETF

Xtrackers MSCI Eurozone Hedged Equity ETF

WisdomTree Europe SmallCap Dividend Fund

WisdomTree Europe Quality Dividend Growth Fund

ProShares MSCI Europe Dividend Growers ETF

iShares MSCI Europe Financials ETF

WisdomTree Europe Hedged SmallCap Equity Fund

iShares MSCI Eurozone ETF

First Trust STOXX European Select Dividend Index Fund

First Trust Europe AlphaDEX Fund

First Trust Eurozone AlphaDEX ETF

SPDR EURO STOXX 50 ETF

UBS AG FI Enhanced Europe 50 ETN

Franklin FTSE Europe ETF

Franklin FTSE Europe Hedged ETF

First Trust IPOX Europe Equity Opportunities ETF

Goldman Sachs ActiveBeta Europe Equity ETF

WisdomTree Europe Hedged Equity Fund

iShares Currency Hedged MSCI Eurozone ETF

iShares Core MSCI Europe ETF

iShares MSCI Europe Small-Cap ETF

iShares Europe ETF

ALPS O'Shares Europe Quality Dividend ETF Shares

Pacer Trendpilot European Index ETF

First Trust RiverFront Dynamic Europe ETF

SPDR Portfolio Europe ETF

Vanguard FTSE Europe ETF

PIMCO 25+ Year Zero Coupon US Treasury Index ETF

Europe is facing the risk of an energy shock-driven recession and periphery stress. That's why we think the ECB will stop hiking earlier than the Fed.

ECB May Limit Hikes As Recession Nears

The single basis point cuts will take effect as of July 1.

Schwab Shaves Prices On Fixed Income ETFs

Schwab Asset Management today announced that it would reduce the operating expense ratios of 10 passively managed ETFs and actively managed mutual funds. “We continually review our cost-effective product suite to find new opportunities to lower expenses for investors,” said David Botset, managing director, head of equity product management and innovation at Schwab Asset Management.

Charles Schwab Reduces Fees on 7 Passive ETFs and 3 Active Mutual Funds

WESTLAKE, Texas--(BUSINESS WIRE)--Schwab Asset Management announces the reduction of operating expense ratios of 10 passively managed ETFs and actively managed mutual funds.

Schwab Asset Management Reduces Fees on 10 Funds

Barclays Bank iPath US Treasury 5-Year Bear Exchange Traded   Note 2011-12.7.21 Ser -A- Lkd to BC 2Y US Trsry Futs Trgtd Expsre

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Barclays Bank iPath US Treasury 10 Yr Bull Exchange Traded    Notes 2010-13.8.20 Sr-A Lk Barclays Cap 10Y US Trs Fut Trgt Exp Id

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Direxion Daily 20+ Year Treasury Bear 3X Shares

ProShares UltraPro Short 20+ Year Treasury

Direxion Daily 7-10 Year Treasury Bull 3x Shares

Direxion Daily 7-10 Year Treasury Bear 3x Shares

ProShares Ultra 20+ Year Treasury

ProShares Ultra 7-10 Year Treasury

Vanguard Intermediate-Term Treasury ETF

Vanguard Short-Term Treasury ETF

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Rates Outlook: Swap Spreads To See Widening Pressure

CSOP FTSE China A50 ETF

iShares Agency Bond ETF

Xtrackers Harvest CSI 300 China A-Shares ETF

Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF

Xtrackers MSCI China A Inclusion Equity ETF

Global X China Biotech Innovation ETF

Global X MSCI China Communication Services ETF

Global X China Energy ETF

Global X MSCI China Health Care ETF

Global X China Industrials

Global X MSCI China Information Technology ETF

Global X MSCI China Large Cap 50 ETF

Global X China Materials ETF

Global X China Consumer ETF

Global X MSCI China Real Estate ETF

Global X MSCI China Consumer Staples ETF

Global X MSCI China Utilities ETF

Global X China Financials ETF

Loncar China Biopharma ETF

Xtrackers MSCI All China Equity ETF

VanEck Vectors ChinaAMC SME-ChiNext ETF

iShares MSCI China A ETF

Invesco China Technology ETF

WisdomTree China ex-State-Owned Enterprises Fund

iShares MSCI China Small-Cap ETF

iShares MSCI Hong Kong ETF

iShares MSCI Taiwan ETF

First Trust China AlphaDEX Fund

Franklin FTSE China ETF

Franklin FTSE Hong Kong ETF

Franklin FTSE Taiwan ETF

Franklin Short Duration U.S. Government ETF

iShares China Large-Cap ETF

SPDR S&P China ETF

KraneShares Bosera MSCI China A Share ETF

KraneShares CICC China 5G & Semiconductor Index ETF

KraneShares CICC China Leaders 100 Index ETF

Kraneshares MSCI China Environment Index ETF

KraneShares SSE STAR Market 50 Index ETF

KraneShares Hang Seng Tech Index ETF

KraneShares MSCI All China Health Care Index ETF

KraneShares CSI China Internet ETF

First Trust Low Duration Opportunities ETF

iShares MSCI China ETF

Invesco Golden Dragon China ETF

Rayliant Quantamental China Equity ETF

Invesco DB US Dollar Index Bearish Fund

WisdomTree Bloomberg US Dollar Bullish Fund

Invesco DB US Dollar Index Bullish Fund

The deficit spending that supported the economy in 2020 is showing up in hot inflation numbers in 2021. While I think the inflation numbers will get better in 2022, I do not believe they will get back to pre-pandemic levels because of owners' equivalent rents and wage gains in the CPI.

Mind The Bond Market

PIMCO 15+ Year US TIPS ETF

Invesco PureBeta 0-5 Yr US TIPS ETF

SPDR Portfolio TIPS ETF

iShares 0-5 Year TIPS Bond ETF

PIMCO 1-5 Year US TIPS ETF

FlexShares iBoxx 5 Year Target Duration TIPS Index Fund

FlexShares iBoxx 3 Year Target Duration TIPS Index Fund

iShares TIPS Bond ETF

SPDR Bloomberg 1-10 Year TIPS ETF

PIMCO Broad US TIPS Index ETF

Vanguard Short-Term Inflation-Protected Securities ETF

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Tapering Impact On Treasury Supply

Treasury yields rallied on Tuesday amid optimism over a potential vaccine from Russia, which drove investors away from safe haven assets like bonds and precious metals. The yield on the benchmark 10-year Treasury note increased 6 basis points to 0.6407% while the yield on the 30-year Treasury bond climbed 8 basis points to 1.3252% as bond prices fell.

Treasury Prices And Bond ETFs Fall Amid Vaccine News

News for Schwab Long-Term US Treasury ETF ETF (SCHQ)