Schwab U.S. Small-Cap ETF (SCHA)
Expense Ratio: 0.08%
Now that we’ve got international and dividend stocks out of the way, we need to make sure our portfolio of the best ETFs has some smaller players in it as well. Have no fear — the Schwab U.S. Small-Cap ETF (SCHA) has you covered on the cheap.
SCHA tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, and the fund itself has 1,765 holdings. Around 55% are small caps, 28% are midcaps and the remaining 17% are micro caps. And while the ETF has a small sliver (under 2%) invested in foreign stocks, it’s still very much focused on smaller domestic stocks.
With that in mind, this is one of the best ETFs for exposure to small- and medium-sized U.S. companies. Plus, the expense ratio is just 0.08% annually, and the turnover is a mere 22%.
I briefly considered the Vanguard Small-Cap ETF (VB) but it’s more expensive by two basis points. More importantly, the Vanguard fund has 46% of its holdings in midcaps vs. 28% for Schwab. I was really looking for the best fund for small-cap coverage, so SCHA was the clear winner.