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Schwab Mortgage-Backed Securities ETF (SMBS)
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Upturn Advisory Summary
08/14/2025: SMBS (1-star) has a low Upturn Star Rating. Not recommended to BUY.
Upturn Star Rating
Not Recommended Performance
These Stocks/ETFs, based on Upturn Advisory, consistently fall short of market performance, signaling caution before investing.
Analysis of Past Performance
Type ETF | Historic Profit 2.77% | Avg. Invested days 43 | Today’s Advisory Consider higher Upturn Star rating |
Upturn Star Rating | Upturn Advisory Performance  5.0 | ETF Returns Performance  1.0 |
| Profits based on simulation | Last Close 08/14/2025 |
Key Highlights
Volume (30-day avg) - | Beta - | 52 Weeks Range 24.11 - 25.59 | Updated Date - |
52 Weeks Range 24.11 - 25.59 | Updated Date - |
Upturn AI SWOT
Schwab Mortgage-Backed Securities ETF
ETF Overview
Overview
Schwab Mortgage-Backed Securities ETF (SCHM) aims to track the investment results of an index composed of U.S. dollar-denominated investment-grade mortgage-backed securities. It provides exposure to the mortgage-backed securities market.
Reputation and Reliability
Schwab is a well-established and reputable financial institution with a long track record.
Management Expertise
Schwab has a team of experienced professionals managing its ETF products.
Investment Objective
Goal
To track the total return of an index that measures the performance of the U.S. dollar-denominated investment-grade mortgage-backed securities market.
Investment Approach and Strategy
Strategy: The ETF seeks to track the Bloomberg US MBS Index.
Composition The ETF holds mortgage-backed securities issued by U.S. government agencies and government-sponsored enterprises.
Market Position
Market Share: SCHM's market share is notable within the MBS ETF landscape.
Total Net Assets (AUM): 6380000000
Competitors
Key Competitors
- iShares MBS ETF (MBB)
- Vanguard Mortgage-Backed Securities ETF (VMBS)
- SPDR Portfolio Mortgage Backed Securities ETF (SPMB)
Competitive Landscape
The MBS ETF market is dominated by a few major players. SCHM competes primarily on cost and tracking efficiency, while MBB benefits from its first-mover advantage and AUM. VMBS is comparable to SCHM on cost and portfolio composition. SCHM's lower expense ratio is a key advantage.
Financial Performance
Historical Performance: Historical performance data can be found on financial websites. It aligns closely with the Bloomberg US MBS Index.
Benchmark Comparison: The ETF's performance closely tracks the Bloomberg US MBS Index, indicating strong benchmark tracking.
Expense Ratio: 0.04
Liquidity
Average Trading Volume
The average trading volume is sufficient for most investors, providing reasonable liquidity.
Bid-Ask Spread
The bid-ask spread is typically tight, reflecting sufficient liquidity for trading.
Market Dynamics
Market Environment Factors
Interest rate movements, housing market conditions, and Federal Reserve policy influence the performance of MBS ETFs.
Growth Trajectory
Growth is influenced by demand for fixed income and the overall health of the mortgage market; there have been no major changes to strategy.
Moat and Competitive Advantages
Competitive Edge
SCHM's competitive edge lies in its low expense ratio, making it a cost-effective option for investors seeking exposure to mortgage-backed securities. Its efficient tracking of the Bloomberg US MBS Index also contributes to its attractiveness. Schwab's strong brand reputation further enhances investor confidence. This combination of low cost, efficient tracking, and strong brand make it a compelling choice. These factors collectively make SCHM an attractive investment vehicle.
Risk Analysis
Volatility
Volatility is moderate and generally lower compared to equity ETFs; it is influenced by interest rate sensitivity.
Market Risk
The ETF is exposed to interest rate risk, prepayment risk, and credit risk (though minimal due to the investment-grade nature of the holdings).
Investor Profile
Ideal Investor Profile
Suitable for investors seeking stable income, diversification within a fixed-income portfolio, and exposure to the U.S. mortgage market.
Market Risk
Best for long-term investors seeking a relatively low-risk fixed income allocation.
Summary
SCHM offers a low-cost and efficient way to gain exposure to the U.S. mortgage-backed securities market. It closely tracks the Bloomberg US MBS Index and benefits from Schwab's strong reputation. Its low expense ratio makes it an attractive option for investors seeking stable income and diversification within a fixed-income portfolio. It's a good choice for long-term investors comfortable with moderate interest rate risk. However, the competitive landscape of MBS ETFs is quite crowded with MBB having a dominant presence in the market share.
Peer Comparison
Sources and Disclaimers
Data Sources:
- Schwab official website
- ETF.com
- Morningstar
- Bloomberg
Disclaimers:
The data provided is for informational purposes only and should not be considered financial advice. Investment decisions should be made based on individual circumstances and after consulting with a qualified financial advisor.
AI Summarization is directionally correct and might not be accurate.
Summarized information shown could be a few years old and not current.
Fundamental Rating based on AI could be based on old data.
AI-generated summaries may have inaccuracies (hallucinations). Please verify the information before taking action.
About Schwab Mortgage-Backed Securities ETF
Exchange NYSE ARCA | Headquaters - | ||
IPO Launch date - | CEO - | ||
Sector - | Industry - | Full time employees - | Website |
Full time employees - | Website | ||
The index is composed of investment-grade mortgage-backed securities issued and/or guaranteed by U.S. government agencies. It is the fund"s policy that under normal circumstances it will invest at least 90% of its net assets (including, for this purpose, any borrowings for investment purposes) in securities included in the index, including TBA transactions.
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