We have qualitatively reviewed this strategy and reaffirmed its Above Average Process and People ratings. Schwab U.S. Large-Cap Value ETF SCHV constructs a well-diversified, market-cap-weighted basket of U.S. value stocks at a rock-bottom fee, a recipe for success over the long run. The following text is from April 10, 2023.

Schwab U.S. Large-Cap Value ETF SCHV constructs a well-diversified, market-cap-weighted basket of U.S. value stocks at a low cost.

The fund replicates the Dow Jones U.S. Large-Cap Value Total Stock Market Index, which holds large-cap stocks from the cheaper side of the market and weights them by their market caps. These companies have modest valuations that reflect their dimmer outlooks. However, performance relative to expectations is what counts, and these firms' meager valuations are a low hurdle to deliver solid returns.

U.S. large-cap stocks attract widespread attention such that new information is quickly reflected in prices. Market-cap-weighting is a sensible approach here. It harnesses the market's collective wisdom of each stock's relative value.

The fund accurately mimics the contours of its average peer, which emphasizes the fund’s minuscule fee in driving Morningstar Category-relative outperformance over the long run. The fund’s sector allocations did not deviate by more than 4 % from the category average as of March 2023. It also trades at a similar average valuation level as its typical peer. On the other hand, the fund has a lower average market cap than the category average because of its broad reach, which improves overall diversification.

The fund diversifies stock-specific risks better than its average peer. Its top 10 holdings represent only 18% of the portfolio, while the category average is 31%.

Analyst Rating

Cheap fund with recent hiccups.

Associate Analyst

Mo'ath Almahasneh

Berkshire Hathaway Inc. - Ordinary Shares - Class B

JPMorgan Chase & Co

Exxon Mobil

Procter & Gamble

Johnson & Johnson

Home Depot

Merck

AbbVie

Chevron

Bank of America

We have qualitatively reviewed this strategy and reaffirmed its Above Average Process rating. The following text is from April 10, 2023.

The Dow Jones U.S. Large-Cap Value Total Stock Market Index constructs a market-cap-weighted portfolio that channels the market's collective wisdom and diversifies risk effectively. It earns an Above Average Process Pillar rating.

Above Average

Process

We have qualitatively reviewed this strategy and reaffirmed its Above Average People rating. The following text is from April 10, 2023.

Schwab has strengthened its equity index management team over the past few years, under the leadership of Chris Bliss. It earns an Above Average People Pillar rating. 

Bliss leads Schwab's equity index team. Since joining Schwab from BlackRock in 2016, Bliss has strengthened the team by increasing specialization and automating more of the managers' workflow. This allows the managers to spend less time on routine tasks and helps them better identify and resolve issues that require their attention. Ferian Juwono, Sabya Sinha, Jeremy Brown, and Agnes Zau join Bliss as named managers on this fund. The named managers have support from associate managers who help the team prepare for index rebalances.

The team looks for ways to slightly improve returns by handling some corporate actions differently from the index. The managers can take advantage of those opportunities when they occur, under tight tracking-error constraints.
Schwab compensates its managers based on tracking error and compliance with risk management, which helps align their interests with investors'.

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 U.S. Large-Cap Value ETF

SCHV tracks a market-cap-weighted index of value stocks based on terms of projected, current and historical metrics.

Schwab U.S. Large-Cap Value ETF™ holds over 500 stocks with value characteristics based on forward P/E, price-to-book and dividend. The SCHV ETF is well-diversified across sectors and holdings, but heavily weighted in financials. The fund has lagged behind the S&P 500 since its inception and underperformed other value funds in recent years.

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Inflation is running hotter than expected, sparking concerns about the Fed interest rates cut in June. The uncertainty has raised the appeal for value investing.

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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.

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

Value investing focuses on undervalued stocks, while growth investing focuses on high-growth stocks. Schwab U.S. Large-Cap Value ETF™ is a compelling choice for investors seeking exposure to the Large Cap Value segment of the U.S. equity market. The SCHV ETF has a well-balanced portfolio with top holdings including Berkshire Hathaway, JPMorgan Chase, Exxon Mobil, Johnson & Johnson, and Procter & Gamble.

SCHV: 2024 Could Mark Value's Return

SCHV has a portfolio of large-cap value stocks in the United States. SCHV's portfolio of value stocks underperformed the broader economy in economic recessions. The fund's valuation is still towards the high end of its historical average, and there is significant downside risk in an economic recession.

SCHV: Significant Downside Risk Ahead

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Amid the continued rally on Wall Street due to the artificial intelligence (AI) frenzy, short sellers have ramped up bets against U.S. stocks. As such, it may be prudent for investors to consider strategies for hedging their exposure to the S&P 500.

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Schwab U.S. Large-Cap Value ETF™ holds more than 500 stocks with value characteristics. The SCHV ETF is better diversified than the S&P 500 across sectors and holdings. Valuation looks attractive; quality is average.

SCHV: Well Diversified, But Still Lagging Competitors

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Enbridge

Coca-Cola

Many investors believe we're at the point of no return or may already be in recession. “A soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending),” said JPMorgan strategists, as quoted by Fortune — leading us to look at some of the best dividend stocks for a recession.

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The Schwab U.S. Large-Cap Value ETF does not appear to be the best choice for investors hoping to profit significantly from a potential stock market recovery. Economic growth trends are a positive sign for the stock market as a whole, but rising investor confidence is more likely to support hard-hit growth stocks than value stocks.

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

Over the past six months, value funds have held up reasonably well. This is a trend I expect to continue going deeper into 2023. Value offers investors a less frothy way to enter the market. These are still large-cap names, but don't trade at extreme valuations. Further, growth themes still look expensive in comparison.

SCHV: Value Funds Continue To Have A Bright Future

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Value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.

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On the latest ETF Edge hosted by Bob Pisani, VettaFi Financial Futurist Dave Nadig and Schwab's DJ Tierney discussed how ETFs can be used for repositioning in a variety of ways, including tax loss harvesting. According to Nadig, “this is the perfect year to do this.

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These are unprecedented times when every asset class except for certain commodities seems to be volatile and the associated market moves can also be difficult to understand. For this purpose, a divergence chart built from the share prices of SCHV and SCHG helps to show that the rotation from growth to value is gaining momentum.

SCHG Vs. SCHV: The Rotation From Growth To Value Is Gaining Momentum

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SCHV is a well-diversified large-cap value fund. The top 3 sectors are financials, healthcare, and industrials.

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VGSH and SCHV saw massive trading volumes in yesterday session.

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SCHV is down for the year but it is beating the broader market and its growth counter-part. This should pique investor interest, especially those looking to limit downside. I believe the fund is well positioned going forward, given its largest weighting in the Financials sector. This is an area I have been bullish on in the short term.

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VGSH and SCHV saw massive volumes in the last trading session.

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It is worth noting that value investing seems more lucrative amid the growing market uncertainties and rising rate environment.

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It is worth noting here that value investing seems more lucrative, given the rebounding U.S. economy, the expectation of higher inflation and chances of Fed interest rate hikes.

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SCHV implements a large-cap value strategy taking into account 3 valuation metrics.

News for Schwab U.S. Large-Cap Value ETF ETF (SCHV)