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ETF Specialist

This ETF Targets an Overlooked Segment of the Market

Large- and small-cap companies are only part of the equation.

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Diversification is one of the most powerful tools an investor has to manage risk. Yet, when it comes to their U.S. equity allocations, investors are often underexposed to mid-cap stocks. Low-cost indexing is a powerful way for investors to gain access to this segment of the market, and Schwab U.S. Mid-Cap ETF (SCHM) is an outstanding fund in this asset class. As one of the cheapest and most broadly diversified market-cap-weighted funds in the category, it earns a Morningstar Analyst Rating of Gold.

This fund tracks the Dow Jones U.S. Mid Cap Total Stock Market Index, which offers broad, market-cap-weighted exposure to U.S. mid-cap stocks. The resulting portfolio accurately represents the composition of the U.S. mid-cap market segment. Its sector exposures are similar to the mid-cap blend Morningstar Category average, as is its market-cap orientation.

Venkata Sai Uppaluri does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.