SCHG: Excellent High-Quality Growth ETF Comes With Big Short-Term Risks

The Sunday Investor7.29K FollowersFollow5ShareSavePlay(14min)Comments(2)SummarySchwab US Large-Cap Growth ETF is a popular large-cap growth ETF with a 0.04% expense ratio and $49 billion in assets under management. It's comprised of about 200 stocks selected based on six screens.Long-term results are terrific, and this article highlights how, with SCHG, you're actually getting excellent exposure to the quality factor. I'll present research showing why this quality is a great approach.Still, short-term risks exist.

The Iran War will likely lead to higher energy prices, but beyond that, EPS surprises notably decelerated in Q4 2025 for SCHG's top ten holdings.I recognize this pattern, and I remind readers that even though consensus earnings growth estimates remain strong, Wall Street analysts were just as bullish (and wrong) for 2022.Overall, SCHG still earns a "hold" rating for its high-quality features, but the rating is under threat, and I expect a second straight quarter of weak EPS surprises will lead to a "sell." Supatman/iStock via Getty Images Investment Thesis The Schwab US Large-Cap Growth ETF (SCHG) is down 10% YTD, but despite decelerating EPS surprises and higher energy costs, Wall Street analysts aren't budging. They're still predicting 23.36% aggregate EPS growth for SCHG, which is similar toThis article was written byThe Sunday Investor7.29K FollowersFollowThe Sunday Investor is focused exclusively on U.S. Equity ETFs. He has a strong analytical background, has received a Certificate of Advanced Investment Advice from the Canadian Securities Institute, and has completed all the educational requirements for the Chartered Investment Manager designation.Having covered hundreds of ETFs on Seeking Alpha, The Sunday Investor has developed a complex, proprietary ETF Rankings system which he shares on his website, etf-rankings.com. Nearly 1,000 ETFs receive individual factor scores covering costs, liquidity, risk, size, value, dividends, growth, quality, momentum, and sentiment, which feed into an easy-to-understand composite score from 1-10.

The Sunday Investor is always active in the comments section in his articles - please don't hesitate to reach out via comment in any article or by visiting etf-rankings.com. Happy Investing!Analyst’s Disclosure: I/we have a beneficial long position in the shares of SCHD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.