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We’re now more than a month into this fiscal year, with plenty of investors having time to assess what may have been one of the busiest six week periods to kick off a fiscal year I’ve seen in a long time.
With investors increasingly rotating out of growth stocks and into more defensive names, it’s been tough to hold steady with one’s growth holdings in this environment. Indeed, picking single stocks can carry significant amounts of risk during periods of time in which the market is rebalancing. That said, for those who are looking for a more balanced approach to having high-growth exposure in the markets, exchange traded funds (ETFs) can be a great option to consider.
On this front, Schwab is one of the top ETF providers I think puts forward top-notch options for investors to consider. For those looking to perhaps move more of their growth capital into ETFs with significant capital appreciation upside, here are three Schwab ETFs I think are worth considering right now.
Schwab 1000 Index ETF (SCHK)
Tracking the Schwab 1000 Index (the top thousand largest U.S. companies by market capitalization), the Schwab 1000 Index ETF (SCHK) is an exchange traded fund one could argue has an inherent growth tilt. Indeed, given the sheer size of most mega-cap tech stocks which are well-covered in this fund, that’s a statement most investors would agree with.
One of the key reasons why the U.S. market continues to dominate most investor portfolios is due to the sheer growth many of the top holdings across top U.S. indices. The SCHK ETF provides exposure to roughly 90% of the earnings of the market at an expense ratio of just three basis points (0.03%), one of the lowest such ratios in the ETF world. I think the ETF’s status as a low-cost core equity anchor should position this ETF for consideration for most long-term investor portfolios for this reason alone.
With a tax-efficient makeup, SCHK has proven its ability too hide during bull markets and provide steady recovery during downturns, making this a top option for long-term growth investors looking for a diversified way to gain exposure to some of the best mega-cap stocks the world has to offer.
Schwab Fundamental International Large Company Index ETF (FNDF)
The Schwab Fundamental International Large Company Index ETF (FNDF) may not necessarily jump out as a top growth ETF to buy, at first glance. After all, this fund is one focused on large-cap international stocks, many of which aren’t the fastest growers in the market.
That said, this ETF does employ a growth tilt in its methodology for sizing positions and which stocks are included in this ETF. As such, I think investors looking for developed markets exposure outside the U.S. can do a lot worse than this ETF, with incredible cash flow growth and an attractive price/earnings multiple of less than 16-times. Compared to most U.S. market indices, that’s cheap.
For investors who are focused on achieving growth at a reasonable price, this is a top option to consider. It’s worth noting that FNDF does carry a higher expense ratio at 0.25%, which is due in part to the higher cost of rotating in and out of international stocks. However, I think the diversification this ETF can provide over a long time horizon is more than worth this higher expense ratio.
Schwab U.S. Large-Cap Growth ETF (SCHG)
Another unique option for investors looking for portfolio stability (using market capitalization or size as a proxy for safety) may want to think about the Schwab U.S. Large-Cap Growth ETF (SLS). Unlike FNDF, this ETF focuses on U.S.-oriented companies, allowing for even more security for those concerned about currency risks or other international shocks.
Personally, I think a portfolio that comprises all three ETFs is optimal, but I can also understand that some investors simply want to stick closer to home. For such investors, this ETF’s large-cap exposure to many of the top leaders in the tech, healthcare and financials sector positions a portfolio for robust performance through market cycles.
Delivering market-beating performance historically, SCHG is among the largest Schwab ETFs, for good reason. With a rock-bottom 0.04% expense ratio and exposure to roughly 230 of the best companies in the world (many of which carry solid exposure to the AI trend), SCHG ought to be a top option for those with a long-term investing time horizon looking to put capital to work in the market over the course of the coming decades.