Schwab 5-10 Year Corporate Bond ETF

SCHI

Market cap $11.5B

Schwab 5-10 Year Corporate Bond ETF is rated Hold due to insufficient margin of safety for new investors in 2026. SCHI offers a 5%-plus yield and a low 0.03% expense ratio, but its 6-year duration exposes investors to significant rate and credit risk. Stable rates allow the fund's income to deliver, but rising yields or widening BBB spreads could erode returns and NAV.

The Federal Reserve's policy outlook just underwent one of its most dramatic reversals in recent years. Bond yields are rising at an alarming rate in response, and the sudden acceleration has sent shockwaves throughout global markets.

Another blockbuster year for bond ETFs is in the books. After two straight years of record net inflows, taxable fixed income ETF assets have nearly doubled since 2020 – crossing the $2 trillion mark.

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Schwab 5-10 Year Corporate Bond ETF (SCHI) offers low-cost exposure to investment-grade corporate bonds with intermediate maturities and controlled risk. SCHI benefits from stable financial conditions and compressed credit spreads, making carry the primary source of return in the current environment. With an average duration of 6 years, SCHI is sensitive to rising rates, but the current declining rate environment limits this risk.

SCHI offers diversified exposure to US investment-grade corporate bonds with 5-10 year maturities, low expenses, and moderate interest rate sensitivity. The ETF uses a resampling strategy to minimize tracking error and transaction costs, maintaining a portfolio of over 2,200 bonds and a 21% turnover rate. Macro indicators like the butterfly heatmap and z-score suggest the current opportunity for tactical gains from curve or spread movements is limited.

We think the Fed has time to assess the impact of tariffs, and we expect it to wait to cut rates until the data show that tariffs are impacting the real economy. So far, there are no signs of recession in the hard data. The tariff pause offers the possibility to avoid worst-case economic scenarios before the damage is crystalized. We believe technical factors will continue to drive market dislocations in spreads and sectors, and that active managers can navigate this more effectively.

The Schwab 5-10 Year Corporate Bond ETF has low expense ratios and focuses on industrial and financial bonds with above junk ratings. Oil prices and Middle East tensions are critical factors influencing rate cuts and inflation, impacting the ETF's performance through duration effects. While supply cut phaseouts mean downside for oil, we're somewhat concerned about the imminent dangers in the Middle East and the issues that could spring up around oil supply chains.

WESTLAKE, Texas--(BUSINESS WIRE)--Schwab Asset Management®, the asset management arm of The Charles Schwab Corporation, today announced forward share splits on 20 Schwab ETFs. Forward ETF share splits increase the number of shares outstanding and decrease the Net Asset Value (NAV) per share. The share splits will not change the total value of a shareholder's investment. The ETF share splits will apply to shareholders of record as of the close of US markets on October 9, 2024, payable after the.

Schwab 5-10 Year Corporate Bond ETF is a passively managed fund that tracks the Bloomberg US 5-10 Year Corporate Bond Index. SCHI has a low expense ratio of 0.03% and its ETF wrapper provides a tax advantage for taxable-account holders. The fund offers high diversification and exposure to industrials and financials sectors, but carries more credit risk than government bonds.