Schwab Short-Term U.S. Treasury ETF

Schwab Short-Term U.S. Treasury ETF (SCHO) holds U.S. Treasury notes that mature in one to three years and tracks the Bloomberg US Treasury 1-3 Year Index. Its 0.03% expense ratio matches similar Vanguard and SPDR funds and is a fifth of the 0.15% that iShares charges for SHY. Its duration, a measure of how much a bond's price reacts to rate changes, was 1.81 years for the index as of December 31, 2025. So its price moves far less than longer-term bond funds when rates change.

• Over the year to Oct 29, 2026, SCHO returned +2.1%, 6th of 8 among similar funds.
• Its 5-year annualized return was +2.1% and its 10-year +1.5%.
• In the 2020 COVID crash, while stocks fell, it gained 2.1%.
• Its worst full calendar year was 2022 (-3.9%); its best was 2025 (+5.5%).
• The deepest fall in its price history was 5.7% (Aug 3, 2021 to Oct 20, 2022), recovered by May 15, 2024.

As of Jun 30, 2026, the fund held 96 securities; the ten largest made up 14.39% of assets.

The bonds mature in 1.9 years on average (weighted by size), with an average coupon of 3.13%.

• Over the three months to Jun 30, 2026, investors added a net $571.1M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.19%, +0.15%, +0.02%.

SCHO aims to match the total return of the Bloomberg US Treasury 1-3 Year Index, before fees and expenses. The index includes publicly issued U.S. Treasury securities that have at least one year and less than three years left until they mature and at least $300 million outstanding. They must also pay a fixed rate, be denominated in U.S. dollars and be non-convertible. The index leaves out Treasury STRIPS, which are bonds split into separate interest and principal pieces. Each bond is weighted by its market value. The index updates on the last business day of each month.

When a bond has less than a year left, it drops out of the index and newer notes take its place. That steady turnover helps explain the fund's 67% portfolio turnover rate. Schwab doesn't buy every bond in the index. It uses sampling, which means holding a smaller set chosen to match the index's maturities, interest-rate sensitivity and yield curve (how rates differ across maturities). As of June 30, 2026, the fund held 96 issues. The ten largest made up 14.39% of assets, and the largest single note was about 2.18%.

The fund must keep at least 90% of its net assets in securities from the index. The rest can go to other government securities, cash, money market funds or repurchase agreements. It may also lend out its securities to help narrow the gap with the index. It held no derivatives as of June 30, 2026, and it does not use leverage.

• SCHO charges 0.03% a year, versus an average of 0.09% for the similar funds below (1st of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $3 in the first year and $39 over 10 years (assuming a 5% annual return).

It holds only short-term U.S. Treasury notes, so its price has moved little even in bad markets.

SCHO could work as a low-volatility reserve to draw on when stocks fall. In the 2020 COVID crash, its deepest dip was 0.3%, and it was back to its prior high by March 20, 2020. It gained 2.1% while stocks were falling. 2022 was harder. Rising rates gave it its worst calendar year, a 3.85% loss. Its deepest drop, 5.7%, ran from August 2021 to October 2022 and took 18.8 months to recover, by May 15, 2024. Anyone who had to cash out shares in that stretch took a modest loss rather than a deep one. The fund launched in 2010, so it has no record from 2008.

Its trailing 12-month yield was 3.84% as of October 29, 2026, paid monthly. That yield rises and falls with short-term interest rates. In the SEC's standard example, costs total $39 over ten years on $10,000. Past results don't predict future ones, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).