S&P Likes Schwab Large-Cap ETF (SCHX)
In a research note, S&P Capital IQ extolled a bullish view on the Schwab U.S. Large-Cap ETF (NYSE: SCHX) and gave the fund an Overweight rating.
SCHX, which debuted in November 2009 and now has $827.4 million in assets, is frequently compared against the SDPR S&P 500 (NYSE: SPY), the Vanguard S&P 500 ETF (NYSE: VOO) and the iShares S&P 500 Index Fund (NYSE: IVV), but the Schwab offering tracks the Dow Jones U.S. Large-Cap Total Stock Market Index, not the S&P 500, and is home to 749 stocks, not 500.
"SCHX has a Marketweight ranking for the risk category. SCHX received a relatively favorable assessment from the holdings-based S&P Quality Ranking input, which puts a focus on consistency and growth of historical earnings and dividends. Also, there was a relatively favorable appraisal from an analytic that is based on S&P Credit Ratings of companies owned by the ETF," S&P Capital IQ said in the research note.
The ETF allocates 19.3 percent of its weight to technology issues and 14.9 percent to financials. Consumer discretionary and health care names receive weights of nearly 12 percent each while consumer staples, industrials and energy each account for more than 10 percent of the ETF's weight.
"All three of the elements utilized in the cost ranking category are related to the ETF security and not its holdings. SCHX has an Overweight ranking for Cost Factors, including a relatively favorable assessment of its gross expense ratio (0.08%), and Bid/Ask Spread, and a mid-range appraisal related to Price to NAV," according to S&P Capital IQ.
With an expense ratio of 0.08%, SCHX is slightly more than expensive than VOO, which charges 0.06% per year, but the Schwab ETF is cheaper than both IVV and SPY. Those funds charge about 0.09% per year. Schwab clients can also trade SCHX free of charge.
Apple (Nasdaq: AAPL) is SCHX's top holding with a weight of almost 4.1 percent. No other stock receives an allocation of more than 1.62 percent. Other top-10 holdings include AT&T (NYSE: T), Chevron (NYSE: CVX), Exxon Mobil (NYSE: XOM) and Pfizer (NYSE: PFE).
Year-to-date, SPY has outperformed SCHX by 20 basis points.
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