SCHG's Upgrade Engine Is Losing Steam - Time To Temper Expectations

2026-02-19 17:43:42 ET

The last time I wrote about the Schwab US Large-Cap Growth ETF ( SCHG ), I had benchmarked its expected performance against VUG and rated it a Hold. My arguments were that SCHG is slower to adapt and more thematically anchored to tech. That made it less positioned for a regime of valuation pressure I saw ahead. That part of SCHG's thesis has played out as expected. VUG has held up better in a period of consolidation since. And the difference is a few basis points - again that is the extent of arbitrage that should be expected given the broader growth alignment and a lot of commonality between the two ETFs. I do not expect the SCHG underperformance to grow beyond a couple of percentage points for context over a longer consolidation or turning regime....

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