When looking for cost-efficient broad market exposure to U.S. equities, investors have plenty of ETFs from which to choose.
That group must include the Schwab U.S. Broad Market ETF (NYSEArca: SCHB).
Schwab currently offers the cheapest U.S.-listed ETFs on the market, including the Schwab U.S. Large-Cap ETF (NYSEArca: SCHX) and SCHB, which both come with a 0.03% expense ratio. That means a $10,000 investment in SCHX or SCHB costs investors a mere $3 per year.
Exchange traded fund providers have been slashing fees to dirt cheap levels. While cheap investments are an attractive draw, people should not solely invest in a fund based on low expense ratios. Still, there are some ETFs with rock-bottom fees that merit consideration by advisors and investors. SCHB tracks the Dow Jones U.S. Broad Stock Market Index.
“Holding about 2,000 stocks, Schwab U.S. Broad Market covers more than 95% of the U.S. market. The ETF tracks an index that ranks stocks by market capitalization, placing the biggest weight on large and mega-size companies, such as Apple (AAPL), Microsoft (MSFT) and ExxonMobil (XOM). Yet stocks of small and midsize companies still account for about 30% of the fund, giving it more exposure to smaller companies than a pure large-cap fund,” reports Kiplinger.[related_stories]
The ETF’s portfolio turnover is just over 4%, according to issuer data. Technology and financial services stocks combine for over 38% of SCHB’s weight.
Equity markets have been weighed down by various uncertainties, stock exchange traded funds may still strengthen as many still expect the S&P 500 to maintain its momentum, with the health care sector leading the charge.
SEE MORE: How to Pick ETFs as Fee War Heats Up
SCHB “serves as a good proxy for the U.S. market. Returns have closely tracked the performance of Standard & Poor’s 500-stock index over the past five years. The fund’s fees can’t be beat, either,” adds Kiplinger.
For more information on index funds, visit our indexing category.
Schwab U.S. Broad Market ETF