9 Best Schwab ETFs to Buy [Build Your Core for Cheap]

We’ve got it pretty easy, folks. Building a comprehensive, diversified portfolio of investments has never been simpler, and it’s never been cheaper.

In fact, one of our most difficult choices anymore is deciding which of several low-cost fund providers we want to provide the foundation of our investing accounts. You don’t have to go with just one, of course—you can mix and match funds from numerous offerers—but some people prefer to buy all of their core portfolio holdings from one fund provider. That could be for any number of reasons; they might prefer one provider’s managers, for instance, or they prefer the way their index funds are built.

Today, I’m going to show you how to keep it all within the Schwab family. Schwab ETFs only number around 30 or so, but they’re among the lowest-cost products on the market, and they largely tend to earn strong ratings from analysts who cover funds.

Read on as I look at a recently expanded list of the best Schwab ETFs to buy for building a basic portfolio. Each of these funds represents a core holding type, and each immediately provides you with exposure to hundreds if not thousands of investments within that space—and for pennies, no less.

Disclaimer: This article does not constitute individualized investment advice. These funds appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

The Best Schwab ETFs to Buy Now

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The purpose of this article is to introduce you to the best Schwab ETFs to buy if you want to address basic portfolio needs in both stocks and bonds. 

In other words: This isn’t an exhaustive list of every fund you’d ever want for every swing or day trading need. This is simply a smart place to start if you want to build a core buy-and-hold portfolio using Schwab ETFs.

In addition to important data information such as dividend yield and expense ratio, I’ve listed Morningstar’s Medalist and Star ratings for each ETF. Morningstar’s Medalist rating is a forward-looking analytical view of the fund, while Morningstar’s Star rating is a backward-looking view that measures a fund’s risk-adjusted return vs. its peers. Every fund on this list has a minimum Medalist rating of Silver and Star rating of 3 (out of 5), with one exception—a newer fund that has a qualifying Medalist rating but hasn’t yet received a Star rating.

1. Schwab U.S. Large-Cap ETF

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• Style: U.S. large-cap stock
• Assets under management: $53.0 billion
• Dividend yield: 1.2%
• Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
• Morningstar Medalist rating: Gold
• Morningstar Star rating: 4 stars

American investors are typically advised to have an S&P 500 fund at the core of their portfolio. The S&P 500, which is a collection of predominantly U.S. large-cap stocks, is considered a proxy for the American stock market. Thus, several fund providers, including Vanguard, State Street Global Advisors (SPDR), and BlackRock’s iShares, offer up ETFs that track the S&P 500.

Schwab provides something similar with the Schwab U.S. Large-Cap ETF (SCHX), which tracks a different large-cap index: the Dow Jones U.S. Large-Cap Total Stock Market Index. Why not the S&P 500? At the time the fund was launched, using this index allowed it to keep costs extremely low—at inception in 2009, it was as cheap or cheaper than any S&P 500 ETFs.

SCHX holds roughly 750 U.S. large-cap stocks, so it’s actually a broader set of holdings than the roughly 500 stocks in your typical S&P 500 ETF. But practically speaking, Schwab’s ETF is still pretty close to being an S&P 500 tracker.

For one, nearly 97% of the S&P 500’s stocks are in SCHX. Also, like S&P 500 ETFs, SCHX is “cap-weighted,” meaning the bigger the stock, the more of it SCHX holds—Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA) are currently top dogs. Indeed, 92% of the ETF’s “weight” (the percentage of the fund’s assets dedicated to a specific holding) is in S&P 500 holdings.

I should note that since Schwab U.S. Large-Cap ETF launched, other fund providers have lowered the expenses on their S&P 500 ETFs, so SCHX is now roughly on par with many of its competitors. Still, it remains one of Schwab’s best ETFs: a straightforward and dirt-cheap way to address one of the most crucial aspects of your portfolio.

Want to learn more about SCHX? Check out the Schwab provider site.

Related: 10 Best Vanguard Funds for the Everyday Investor

2. Schwab U.S. Broad Market ETF

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• Style: U.S. total market stock
• Assets under management: $33.4 billion
• Dividend yield: 1.2%
• Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
• Morningstar Medalist rating: Gold
• Morningstar Star rating: 3 stars

Portfolio recommendations call for more than just American large-cap stocks. You’ll usually be advised to put at least some money into stocks of U.S. mid- and small-cap companies. While these firms are less financially secure, and while their stocks can be more volatile, they historically have also provided more upside potential for those willing to take on the risk.

You can do this in one of two ways:

1. Buy mid- and small-cap funds alongside your large-cap funds.
2. Buy a “total market” fund, which allows you to hold stocks of all sizes in one place.

The first option gives you more control of how much, or how little, you want to invest in stocks of each size. But the second option is by far the easier one, allowing you to invest in a diversified portfolio of various sized stocks with a single click.

And that’s exactly what the Schwab U.S. Broad Market ETF (SCHB) does.

SCHB holds 2,400 of the largest publicly traded U.S. companies—which includes virtually all U.S. large-cap stocks, sure, but also various amounts of mid- and small-sized equities, too. Right now, about 70% of SCHB’s portfolio is invested in large-cap stocks, but 20% is dedicated to mid-caps, and the remainder is invested in small companies.

Like SCHX and most of the other Schwab ETFs on this list, SCHB is market cap-weighted, so stocks like Nvidia and Apple still have the most impact on the ETF’s performance. All you’re doing is trading in some large-cap weight for exposure to some mid- and small-sized firms.

Want to learn more about SCHB? Check out the Schwab provider site.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.

3. Schwab U.S. Dividend Equity ETF

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• Style: U.S. dividend stock
• Assets under management: $68.9 billion
• Dividend yield: 3.6%
• Expense ratio: 0.06%, or 60¢ annually on a $1,000 investment
• Morningstar Medalist rating: Gold
• Morningstar Star rating: 4 stars

Not all equity returns come from stock prices increasing—dividends often play an important role, too.

Dividends, which are cash payments that companies make to its shareholders, can be a source of return when prices are flat or even down. They can be reinvested to compound your returns over time (over longer time periods, dividends have accounted for roughly 40% to 50% of equity returns). And once you hit retirement, that investment income can be used to pay your regular bills.

While you could try to get that exposure by picking individual dividend stocks, you could also diversify your risk across hundreds of payers via a dividend ETF like the Schwab U.S. Dividend Equity ETF (SCHD).

This Schwab index ETF holds around 100 dividend stocks selected for their high yields, track records of consistent dividend payments, and relative strength of their financial fundamentals. Specifically, SCHD requires holdings to have paid dividends for at least 10 consecutive years, and it measures them based on yield, five-year dividend growth rate, return on equity, and free cash flow/total debt.

The fund skews large-cap, at about 65% of the portfolio, while mids make up another 30%, and smalls occupy the rest of SCHD’s assets. Top holdings at the moment include numerous Dividend Aristocrats—companies that have raised their dividends on an annual basis for at least 25 consecutive years—such as Chevron (CVX) and PepsiCo (PEP). It even holds a few Dividend Kings (50+ years) including Coca-Cola (KO) and AbbVie (ABBV).

These holdings help SCHD throw off a sizable annual yield of well more than 3%, and close to triple what you’d earn from holding an S&P 500 fund. Performance is admirable, too: “This simple, transparent strategy effectively identifies high-quality stocks at reasonable prices,” says Morningstar analyst Ryan Jackson. “That valuable balance has helped the fund capably navigate drawdowns and keep pace during rallies.”

This all makes SCHD one of the best Schwab ETFs to buy if you want much higher-than-average yield while still paying a low fee.

Want to learn more about SCHD? Check out the Schwab provider site.

Related: 7 Best High-Dividend ETFs for Income-Minded Investors

4. Schwab U.S. Large-Cap Growth ETF

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• Style: U.S. large-cap growth stock
• Assets under management: $38.1 billion
• Dividend yield: 0.4%
• Expense ratio: 0.04%, or 40¢ annually on a $1,000 investment
• Morningstar Medalist rating: Silver
• Morningstar Star rating: 5 stars

Investors looking for better stock-price performance than what the S&P 500 might provide often gravitate toward growth stocks—companies expected to improve their revenues, earnings, and/or other performance metrics at a greater clip than their peers.

Of course, growth stocks sometimes offer a bumpier ride along the way. Investors are happy to bid growth stocks higher, often ignoring too-hot valuations, as long as future expectations remain high … but when the growth story gets interrupted, they can flee just as quickly as they arrived. So rather than gamble on one or two individual plays, some investors buy ETFs to spread that risk across a few hundred names.

The Schwab U.S. Large-Cap Growth ETF (SCHG) allows investors to do just that, while primarily sticking to large-cap names. SCHG’s 230-stock portfolio is 90% weighted toward large caps, with the remainder almost entirely socked away in bigger mid-cap names.

SCHG is pretty consistent with many growth ETFs in that a huge chunk of assets are parked in technology and tech-esque sectors. The technology sector itself accounts for almost half of this Schwab ETF’s assets, with consumer discretionary (14%) and communication services (14%) taking up massive chunks as well.

While completely unremarkable from a portfolio construction point of view, SCHG is nonetheless one of the best Schwab ETFs you can buy because it has it where it counts: returns. While past performance isn’t a guarantee of future returns, it has done extremely well against its peers—SCHG’s trailing three-, five-, 10-, and 15-year returns are all in the top 10% of its Morningstar category.

Want to learn more about SCHG? Check out the Schwab provider site.

Related: 9 Best Fidelity Index Funds to Buy

5. Schwab Fundamental U.S. Large Company ETF

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• Style: U.S. large-cap value stock
• Assets under management: $912.9 million
• Dividend yield: 1.7%
• Expense ratio: 0.25%, or $2.50 annually on a $1,000 investment
• Morningstar Medalist rating: Silver
• Morningstar Star rating: 5 stars

The flip side of growth is value—investing in companies that the market is somehow undervaluing, based on one or more metrics, with the expectation that buyers will recognize that value and send shares higher.

While Schwab has a value fund similar to the aforementioned SCHG—Schwab U.S. Large-Cap Value ETF (SCHV)—a potentially better Schwab fund for the task is the Schwab Fundamental U.S. Large Company ETF (FNDX).

SCHV is similar to SCHG in that it’s a market cap-weighted group of stocks that exhibit value characteristics. There’s nothing wrong with that. But FNDX’s tracking index looks at stocks a different way: “It selects, ranks, and weights securities by fundamental measures of company size—adjusted sales, retained operating cash flow, and dividends plus buybacks—rather than market capitalization.” 

The resulting portfolio includes close to 740 stocks, roughly 70/30 split between large-caps and mid-caps. Top sectors include financial services, technology, health care, consumer discretionary, and communication services, all of which enjoy double-digit weightings at the moment.

More importantly, it’s similar to SCHV in that it’s large-cap value in nature, but with equivalent (and sometimes even better) valuation metrics and superior performance over time.

To wit, Schwab Fundamental U.S. Large Company ETF has outperformed Schwab U.S. Large-Cap Value ETF over every meaningful time frame since inception in 2013. Meanwhile, as I write this, FNDX’s portfolio price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), and price-to-cash flow (P/CF) are all lower than SCHV. That makes it one of the best (if not the best) Schwab ETFs to buy if you’re looking for a value component.

Want to learn more about FNDX? Check out the Schwab provider site.

Related: The 10 Best Fidelity Funds You Can Own

6. Schwab International Equity ETF

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• Style: International large-cap stock
• Assets under management: $41.8 billion
• Dividend yield: 3.3%
• Expense ratio: 0.06%, or 60¢ annually on a $1,000 investment
• Morningstar Medalist rating: Silver
• Morningstar Star rating: 4 stars

Up until now, every Schwab ETF I’ve talked about has focused on U.S. companies.

America’s stock markets have long been among the best-performing on the planet, and at least for now, that’s expected to continue. Thus, most advisers will tell you to put the lion’s share of your assets into owning U.S.-based stocks and bonds.

But those same advisors will also typically tell you to get a little geographic diversification, too. The U.S. might not carry the torch every single year, and having international exposure might help smooth out rough patches when American stocks struggle.

The Schwab International Equity ETF (SCHF) is an extremely low-cost way to do so, at just 0.06% annually. It holds a broad selection of about 1,500 equities of companies domiciled outside the U.S., with most of those coming from “developed” companies such as Japan, the U.K., and France.

Like many general developed-nation equity ETFs, SCHF tilts heavily toward large-cap stocks (80%-plus) with effectively all the rest of assets invested in mid-caps. Also, European stocks especially tend to offer higher dividends on average than their American counterparts; holdings including Nestle (NSRGY), Novartis (NVS), and AstraZeneca (AZN) help produce a fund yield that’s more than twice what the S&P 500 pays.

Want to learn more about SCHF? Check out the Schwab provider site.

Related: 10 Monthly Dividend Stocks for Frequent, Regular Income

7. Schwab U.S. Aggregate Bond ETF

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• Style: U.S. intermediate core bond
• Assets under management: $8.5 billion
• SEC yield: 4.5%*
• Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
• Morningstar Medalist rating: Gold
• Morningstar Star rating: 3 stars

Investors are also told to allocate some of their nest egg to bonds, which serve a very different purpose than stocks.

With stocks, price changes are the primary driver of returns—you can receive dividend income, too, but in general, you’re expected to get more performance from the stock growing in value. But bonds tend to be much less volatile and mostly trade around a “par” value. Instead, their performance largely comes from the interest income they generate. As a result, younger investors are told to invest almost exclusively in stocks, then slowly raise their allocation to bonds as they get older, as they shift from wealth creation to wealth preservation.

You could hold individual bonds, but they’re even more difficult to assess than stocks, and it’s much more difficult to find publicly available information and analysis on them. So, many investors just let a fund manager or index do the heavy lifting.

The Schwab U.S. Aggregate Bond ETF (SCHZ), for instance, lets you tap a wildly massive 11,000 bonds and other debt securities in just one click. It’s a diversified portfolio largely made up of U.S. Treasury bonds, corporate bonds, and mortgage-backed securities, all of which have earned ratings within the “investment-grade” spectrum of debt. SCHZ’s holdings also span a wide number of maturities, from just a few months to more than 20 years.

All told, SCHZ’s portfolio has a duration of 5.9 years. Duration is a measure of interest-rate risk—in this ETF’s case, a duration of 5.9 years implies that if interest rates fell by a percentage point, SCHZ’s price would rise by 5.9% (and vice versa). Remember: Bond prices and interest rates have an inverse relationship.

SCHZ is not a scintillating fund, but it’s one of the best Schwab ETFs for building a basic portfolio, offering a moderate level of income for a moderate amount of risk.

* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

Want to learn more about SCHZ? Check out the Schwab provider site.

Related: The 10 Best Vanguard Index Funds You Can Buy

8. Schwab Short-Term U.S. Treasury ETF

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• Style: U.S. short-term government bond
• Assets under management: $11.4 billion
• SEC yield: 4.3%
• Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
• Morningstar Medalist rating: Gold
• Morningstar Star rating: 4 stars

As a general rule, the longer a bond’s maturity, the higher the risk. Think about it: If you buy a two-year bond from a financially strong company, you’ll be pretty confident it can repay that bond in full. But if you buy a 20-year bond from that same company … sure, you might still have plenty of faith in the company, but 20 years is a lot longer for something to go wrong. As a result, issuers typically have to offer higher yields to convince investors to take that added risk.

Thus, short-term bond funds typically offer investors a relatively safe place to invest while earning a modest amount of income.

The Schwab Short-Term U.S. Treasury ETF (SCHO) further ratchets down risk by holding only short-term debt from the U.S. Treasury—an institution that enjoys some of the highest debt ratings on the planet given their long history of paying back its debtors. This Schwab ETF currently holds almost 100 different Treasury issues with an average maturity of just two years. It has a duration of just 1.9 years, meaning if interest rates rose a full percentage point, SCHO’s price would decline by only about 2%.

Also worth noting: Today, the “yield curve” is inverted, meaning short-term rates are higher than long-term rates. As a result, despite SCHO’s relatively modest risk profile, it yields only a little less than SCHZ, which has a much longer average maturity and presents much more interest-rate risk.

Want to learn more about SCHO? Check out the Schwab provider site.

Related: What Is a Roth Conversion? [A Tax-Smart Retirement Strategy]

9. Schwab High Yield Bond ETF

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• Style: U.S. high-yield corporate bond
• Assets under management: $799.5 million
• SEC yield: 7.3%
• Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
• Morningstar Medalist rating: Gold
• Morningstar Star rating: N/A*

The major credit rating agencies (Moody’s, S&P, and Fitch) have a spectrum of grades that helps bond investors understand the likelihood that they’ll receive their initial capital, and interest, back in full. The higher grades collectively are referred to as “investment grade,” while those below are cleverly referred to as … well, “below investment grade.”

Bonds in this category are considered to have a greater risk of default, so there’s an elevated amount of risk—which is why below-investment-grade bonds are also referred to as “junk.”

That’s not to say that you can’t or even shouldn’t invest in below-investment-grade bonds. Many people do, and they might be right for you. Because in exchange for that higher risk, these bonds have to offer higher yields to attract investors, hence these debt issues are also referred to as “high-yield bonds.”

The Schwab High Yield Bond ETF (SCYB) is one of the most cost-effective ways to gain exposure to these bonds. 

For all of 3 basis points (a basis point is one one-hundredth of a percentage point), Schwab High Yield Bond provides access to a portfolio of nearly 1,800 corporate bonds with composite ratings of BB or below. About half of SCYB’s holdings are rated BB (the highest junk grade), with another 30% in B securities, 10% in CCC, and virtually all of the rest in “unrated.” (Unrated securities aren’t rated by the major agencies, but that doesn’t imply that their grades would be any higher or lower than the rated bonds SCYB chooses to hold.) Maturities are on the short side, though, with about 75% sitting at five years or less.

The payoff, of course, is a much grander yield than you’ll get out of higher-quality bonds—SCYB currently pays north of 7%.

* SCYB was launched in July 2023. Morningstar has not yet assigned a star rating to this ETF.

Want to learn more about SCYB? Check out the Schwab provider site.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.

How Do You Invest in Schwab ETFs?

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Once you know which Schwab ETFs you want to invest in, buying them couldn’t be easier.

As long as you have a brokerage account that allows you to buy ETFs that trade on a major U.S. exchange (which is the vast majority of brokerage accounts), you simply pop in the ticker and buy your desired number of shares.

That’s literally it.

If you’re asking us, Young and the Invested’s highest-rated brokerages include Robinhood, Webull, and Moomoo. But you can get Schwab ETFs through E*Trade, Fidelity, Schwab (of course), Vanguard, and many, many other brokerages.

Learn More About These and Other Funds With Morningstar Investor

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If you’re buying a fund you plan on holding for years (if not forever), you want to know you’re making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds and ETFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

With Morningstar Investor, you’ll enjoy a wealth of features, including Morningstar Portfolio X-Ray®, stock and fund watchlists, news and commentary, screeners, and more. And you can try it before you buy it. Right now, Morningstar Investor is offering a free seven-day trial. You can check out the current deal, as well as discounted rates for students and teachers, by visiting the Morningstar Investor website.