This Schwab ETF Charges $3 a Year Per $10,000 Invested and Holds Nearly Every Stock in America

There is an ongoing study from Hendrik Bessembinder at the W. P. Carey School of Business at Arizona State University that I’ve followed closely. It’s titled 100 Years in the U.S. Stock Market, and it looks at investment outcomes for more than 229,000 stocks from 1926 through 2025, analyzing both percentage returns and total dollar wealth creation.

The findings are not what most investors expect. Out of roughly $43 trillion in net wealth creation from 1926 to 2016, just 89 stocks were responsible for all of it. Extend that dataset through 2025, and it becomes even more concentrated. Roughly half of the $91 trillion in total wealth creation came from just 46 companies. To visualize this, many investors now use advanced screener tools to see just how concentrated these “wealth creators” have become in the modern era.

That is the reality of the stock market. A very small number of companies drive the vast majority of returns. There is a reason why John C. Bogle famously said, “Don’t look for the needle in the haystack. Just buy the haystack.” Yes, there will always be winners, but the odds of consistently picking the top 40 or 50 companies out of hundreds of thousands are extremely low.

If you instead buy a market-cap-weighted index fund, you are almost guaranteed to own those winners as they grow and take up a larger share of the market. You do not need to predict them ahead of time. And the best part is that this approach can be done at extremely low cost. A good example is the Schwab U.S. Broad Market ETF (NYSEMKT: SCHB).

What is SCHB?

SCHB is a passive ETF that tracks the Dow Jones U.S. Broad Market Index. It is designed to represent the bulk of the investable U.S. equity market, covering approximately 2,500 publicly traded companies across large, mid, and small-cap segments.

Large caps generally include companies above $10 billion in market value, mid-caps range between $2 billion and $10 billion, and small caps fall below that threshold. The fund brings all of them together into one portfolio.

Importantly, the index is weighted by market capitalization. That means a company’s weight is determined by its share price multiplied by its shares outstanding. As companies grow and their stock prices rise, they naturally take up a larger share of the index. At the same time, companies that underperform shrink in weight.

Over long periods, this creates a built-in momentum effect. Winners get more exposure, while laggards fade out. It is a simple but effective self-cleansing mechanism that requires very little intervention. This is reflected in the turnover; as of March 31, 2026, SCHB’s annual turnover rate is just 3.12%, which is very low. This low turnover is a key driver of tax efficiency, particularly for those holding the fund in a taxable brokerage account.

The results have been strong. Over the past 10 years, on a total return basis with dividends reinvested, SCHB has delivered a 13.66% annualized return. The income component is modest, with a 30-day SEC yield of 1.06%, but this is primarily a total return vehicle, not an income fund.

The High Cost of Inaction

While a few basis points may seem trivial, the mathematical difference between a low-cost fund like SCHB and a standard S&P 500 tracker like SPY is significant over time. For a $1 million portfolio, the 0.06% difference in expense ratios equates to $645 in annual savings. If those savings are reinvested at a 7% return over 20 years, an investor would accumulate an additional $26,442 simply by choosing the lower-cost vehicle.

Why I like SCHB

In investing, there is a paradox where paying less often leads to getting more. Instead of paying high fees for niche or thematic strategies that focus on a small group of stocks, you can own the entire market for just 0.03% per year. On a $10,000 investment, that works out to about $3 annually in fees. That is almost negligible, and helps preserve your compounding over time.

That said, you do not have to use SCHB specifically. The broader idea is to own a low-cost, diversified index fund and hold it for the long term. Common alternatives include the Vanguard Total Stock Market ETF (NYSEMKT: VTI) or the Schwab U.S. Large-Cap ETF (NYSEMKT: SCHX), the latter of which provides exposure to roughly 750 of the largest U.S. companies.

Because these funds track different benchmarks, they are not considered “substantially identical” under tax rules. That opens the door for tax-loss harvesting. If one position is down, you can sell it to realize a loss and immediately switch into another—such as moving from SCHB to VTI or SCHX—without violating the 31-day wash sale rule. You maintain market exposure while capturing the tax benefit.

Keeping a few of these interchangeable ETFs in your toolkit can be useful over time, especially in taxable accounts. Just keep in mind that tax-loss harvesting can get complex depending on your situation, so if you’re unsure how to apply it properly, it may be worth consulting a financial advisor.

Editor’s Note: This update incorporates a detailed mathematical analysis of expense ratio impacts on long-term portfolio growth and introduces the Schwab U.S. Large-Cap ETF (SCHX) as an additional tool for tax-loss harvesting strategies. The text also includes new technical insights regarding the relationship between low turnover rates and tax efficiency, as well as the application of modern screening tools to verify market concentration trends.