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. It earns a Morningstar Analyst Rating of Silver.  

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

Johnson & Johnson

Procter & Gamble

Home Depot

Merck

AbbVie

Chevron

PepsiCo

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

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.

Fund holdings affect fund performance more than fees or past performance.

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