SCHI Stock: A Guide to Schwab 5-10 Year Corporate Bond ETF

Investors seeking steady income and exposure to the U.S. credit market often look toward SCHI stock, the ticker symbol for the Schwab 5-10 Year Corporate Bond ETF. Managed by Charles Schwab Asset Management and traded on the NYSE Arca, this exchange-traded fund provides a streamlined way to access investment-grade corporate debt. As of late 2024, it remains a popular choice for those looking to balance yield with moderate interest rate risk.

Investment Objective and Strategy

The primary goal of the Schwab 5-10 Year Corporate Bond ETF is to track the performance of the Bloomberg US 5-10 Year Corporate Bond Index. This index measures the investment-grade, fixed-rate, taxable corporate bond market in the United States.

The fund focuses specifically on "intermediate-term" securities. By targeting bonds with remaining maturities between five and ten years, SCHI aims to offer a higher yield than short-term bonds while maintaining less price volatility than long-term corporate bonds. This positioning makes it a core holding for many diversified portfolios.

Fund Characteristics and Fees

One of the most compelling features of SCHI stock is its cost efficiency. According to recent data from Schwab Asset Management, the fund maintains an expense ratio of 0.03%. This makes it one of the most competitively priced bond ETFs in the industry, allowing investors to keep more of their total returns.

In terms of share structure, the fund underwent a 2-for-1 share split effective October 11, 2024. Such actions are typically taken to make the price per share more accessible to retail investors without changing the underlying value of their holdings. Key metrics to watch include the SEC Yield and Distribution Yield, which provide a snapshot of the income generated by the underlying bond portfolio.

Portfolio Composition

SCHI maintains a high standard for credit quality, exclusively holding "investment-grade" corporate bonds. This means the issuers have a high likelihood of meeting their debt obligations, reducing default risk compared to high-yield or "junk" bonds.

The portfolio is diversified across various sectors and major corporate entities. Top holdings often include debt issued by industry leaders such as:

• Banking: JPMorgan Chase and Bank of America
• Technology: Meta Platforms and Apple
• Healthcare: CVS Health and UnitedHealth Group

Sector allocation is generally weighted toward the banking and consumer non-cyclical industries, reflecting the largest issuers in the U.S. corporate bond market.

Performance and Risk Profile

The performance of SCHI stock is closely tied to interest rate movements. The fund’s Effective Duration typically hovers around 6.1 years. This metric suggests that for every 1% change in interest rates, the fund's price is expected to move by approximately 6.1% in the opposite direction.

Historically, SCHI has provided stable NAV (Net Asset Value) performance with a focus on monthly income. While it is subject to market volatility, its standard deviation is generally lower than that of the broader equity market, serving as a protective layer during stock market downturns.

Dividend Information

A major draw for SCHI investors is its distribution frequency. The fund pays out dividends on a monthly basis, making it a reliable tool for cash flow management. Unlike traditional mutual funds, the ETF structure of SCHI often allows for greater tax efficiency, as the creation and redemption process can minimize capital gains distributions.

Comparison with Peers

When evaluating SCHI stock, investors often compare it to other major players in the fixed-income space. Its primary competitors include the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and various iShares products. While these funds track similar indices, SCHI differentiates itself through its ultra-low expense ratio and the specific maturity window of 5-10 years, which can differ slightly from competitors' "intermediate" definitions.

See Also

To deepen your understanding of fixed income and market dynamics, you may want to explore related financial topics such as:

• Fixed Income Basics
• Understanding Corporate Bonds
• Investment Grade vs. High Yield
• The Role of the Federal Reserve in Interest Rates

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