A Cost-Effective Small-Cap ETF

The idea of low-fee exchange traded funds is not confined to U.S. large-caps. Investors can pinch pennies on a variety of asset classes, including funds tracking U.S. small-cap stocks. One of the least expensive options among small-cap ETFs is the Schwab U.S. Small-Cap (NYSEArca: SCHA).

In late 2016, Schwab lowered the annual fee on SCHA. SCHA now charges 0.06% per year, or just $6 on a $10,000 stake, making it one of the least expensive small-cap ETFs on the market. Schwab clients can trade SCHA commission-free on the firm’s ETF OneSource platform.

SCHA “offers well-diversified exposure to U.S. small-cap stocks by tracking the Dow Jones U.S. Small-Cap Total Stock Market Index,” said Morningstar in a recent note. “The index represents the bottom 15% of stocks by market cap in the total U.S. investable stock market. It holds about 1,750 stocks and extends further down the market-cap spectrum than its typical peer. But its average market cap is 20% larger than the Morningstar Category average’s, likely because of a market-cap-weighting approach that pulls the portfolio toward the largest small-cap stocks.”

SCHA is slightly cheaper than the competing funds offered by rivals iShares and Vanguard. The $6.7 billion SCHA holds nearly 1,750 stocks. Its largest sector allocation is 17.7% to financial services. Technology and industrial stocks combine for 30.6% of the fund’s roster.