7 Best Charles Schwab ETFs Of May 2024 (2024)

Funds that invest in international stocks—especially large-cap value and blend oriented equities—generally outperformed U.S. stocks and funds on average in 2022. But U.S. stocks and funds generally resumed market leadership in 2023.

Still, you shouldn’t give up on the non-U.S.-stock asset class. Different segments of the stock market tend to rotate in and out of favor.

Plus, dividend yield from the Schwab International Dividend Equity ETF is more than triple the yield by the broad U.S. stock market, represented by the S&P 500 Index. SCHY owns more than 130 securities that are financially strong, large-cap international companies with 10-year histories of growing their dividend payments.

Having opened just in April 2021, SCHY has a brief track record. But many of its holdings are well-known international names, including BHP Group (BHP), Roche Holding (ROG), Unilever (ULVR), Toronto-Dominion Bank (TD) and Rio Tinto (RIO). Conservative investors who seek growth, income and global exposure should take a look at this Schwab ETF.

The Schwab Fundamental U.S. Broad Market Index ETF owns the largest U.S. companies by market cap. It holds stakes in roughly 1,700 stocks.

This tax-efficient, low-cost fund strives to capture both value and yield. Unlike a typical market-cap fund, FNDB includes companies with solid growth prospects, lower valuations and above-average yields. This provides an opportunity that could be right for value, growth and income investors.

FNDB’s average annual returns substantially outperformed its Morningstar large-cap value category average over the past one, two, three, five and 10 years. With its reasonable valuation, low fees and steady yield, FNDB is poised to perform well going forward.

Real estate is an important asset class for a diversified investment portfolio, and the Schwab U.S. REIT ETF offers a very affordable entry point. This index fund owns about 120 stocks, which span the real estate investment trust (REIT) universe.

SCHH is a competitive, market-cap weighted offering. Its annual fee is a fraction of its Morningstar category’s average. SCHH’s dividend yield is roughly on a par with its peer group’s. SCHH reports that its biggest subindustry bet is on telecommunications tower REITs. Its next largest allocations are to industrial, retail and multifamily residential REITs.

With an average market cap of approximately $10.3 billion, Schwab’s U.S. Mid-Cap ETF offers the possibility of outperforming large-cap funds over time. That’s because mid- and small-cap companies are more nimble and can achieve higher growth rates than large-cap stocks.

SCHM owns about 500 stocks, providing solid diversification plus good coverage of both the growth and value investing sectors. The fund’s passive management approach guarantees an ultra-low expense ratio, which allows most of your investment dollars to go directly into the market, not management’s pockets.

Concentrating roughly 65% of its portfolio in industrial stocks, technology, financial services and consumer discretionary stocks, SCHM is a solid choice for investors looking to extend their exposure to the middle swath of U.S. markets.

Exposure to fixed income helps investors limit volatility and increase cash flow. The Schwab Short-Term U.S. Treasury ETF holds more than 90 Treasury securities with maturities of one to three years. Investors tended to replace their maturing fixed income securities with newer, higher-yielding debt as long as the Federal Reserve continued to raise interest rates.

But prices for existing bonds—especially longer-term, lower yielding ones—move inversely to interest rates. So, when interest rates reverse course—which is expected some time this calendar year—this fund could put you in a good position for capital appreciation. Additionally, Treasurys are tax-exempt from state and local income taxes.

In 2022, Schwab ventured into the world of cryptocurrency and launched the Schwab Crypto Thematic ETF. STCE doesn’t directly own crypto, opting instead to invest in the stocks of companies with global exposure to cryptocurrency, blockchain and other digital assets.

STCE is a passive fund that attempts to replicate the performance of the Schwab Crypto Thematic Index. Its top 10 holdings comprise roughly 50% of the fund’s portfolio, including prominent players in the digital infrastructure space like MicroStrategy (MSTR), Coinbase Global (COIN), Riot Platforms (RIOT), NVIDIA (NVDA) and Robinhood Markets (HOOD).

Investors who believe in the long term potential of digital assets and blockchain technology can dip their toes into this challenging market with a small position in STCE. STCE’s average annual returns since its 2022 inception as well so far this year are positive.

Over longer time periods, small-cap stocks have performed quite well compared to their larger counterparts. The Schwab Fundamental U.S. Small Company Index ETF concentrates its holdings in smaller companies, weighted by fundamental factors.

FNDA begins by screening the entire universe of small-cap companies for the names with the best five-year historical sales growth, cash flow, dividend yield and share buybacks. The fund is widely diversified, owning nearly 1,000 stocks.

This small-cap, fundamental, factor-weighted offering has outperformed its Morningstar small-cap blend peer group’s average over the past one, three, five and 10 years. If you’re interested in adding small-cap exposure to a diversified portfolio, check out FNDA.