Is SCHB ETF the Top Total Market ETF to Buy in 2025?

For passive investors building core equity portfolios in 2025, total market ETFs remain central for long-term strategies. The Schwab U.S. Broad Market ETF (SCHB) has gained attention due to its ultra-low costs and broad market exposure. 

But how does SCHB compare against heavyweights like VTI, ITOT, or SPTM? And is it the best total market ETF to hold this year? This article examines the SCHB ETF's latest data, performance metrics, and strategic considerations to help you decide.

What Is SCHB ETF and Why Does It Matter?

SCHB tracks the Dow Jones U.S. Broad Stock Market Index, encompassing approximately 2,380–2,500 U.S.-listed companies, including large‑caps, mid‑caps, and small‑caps (as of July 29, 2025). 

It casts a wide net across the U.S. market, providing diversification with nearly 90% of its assets fully replicating the index and allowing up to 10% in closely related securities.

Key advantages include:

• Extremely low expense ratio of 0.03%, one of the lowest in its category

• Access to more than 2,300 stocks—all U.S. major segments

• High tax-efficiency, with minimal capital gain distributions

• Solid liquidity and tight bid-ask spreads for trading ease

Given these traits, SCHB is frequently recommended as a core passive holding.

SCHB ETF Performance Overview

YTD and Recent Returns

As of July 2025, SCHB posted a +5.74% YTD return, with +4.65% in the past month and +9.94% over the last three months.

Multi‑Year Track Record

SCHB has delivered impressive long-term results. Over the past year, the total return is 17.88%, while the 5-year annualised return is approximately 15.9%, and the 10-year average return is nearly 12.9%.

It performs positively against other major index funds and considerably exceeds the average for the Large Blend category, which shows approximately 13.3% yearly and 15.1% over five years.

Risk‑Adjusted Metrics

Annualised volatility remains moderate at ~15%, matching typical broad equity exposures. 

From January 2010 to June 2025, SCHB generated a CAGR of ~13.52%, recovering from a maximum drawdown of –24.9% (experienced during the COVID‑19 crash), with a recovery period of about two years.

SCHB vs Major Peers: VTI, ITOT, and Others

According to reviews of total stock market ETFs, SCHB ranks among the top options alongside VTI (Vanguard Total Stock Market ETF) and ITOT (iShares Core S&P Total U.S. Stock Market ETF). All three offer similar 5-year annualised returns (~14%), with equally low expense ratios of 0.03%.

Differentiators:

• SCHB stands out for being Schwab-branded, popular among Schwab platform users, and offering commission‑free trading for many clients

• Compared to VTI and ITOT, SCHB includes slightly fewer holdings but maintains comparable sector exposure and tracking precision.

• Certain critics highlight that SCHB's marginally reduced liquidity and volume lead to greater sector concentration, although the results remain similar.

Strengths of SCHB in 2025

1) Unmatched Low Cost

SCHB features a 0.03% expense ratio, which helps keep costs from significantly reducing returns. Across decades, this fee advantage compounds significantly vs. higher-cost alternatives.

2) Broad Market Exposure

Covering over 2,300 stocks from mega caps to small caps gives SCHB excellent diversification. The top 10 holdings account for only ~32.8%, whereas category averages have roughly 42% in top holdings, suggesting broader exposure and less concentration risk.

3) Competitive Performance

SCHB has either kept pace with or slightly lagged behind key total market competitors: In the past 5 years, its approximately 16.1% annualised return is comparable to VTI (~16.1%) and slightly lower than ITOT (~16.2%).

4) Tax Efficiency

SCHB's structure and consistent replication contribute to minimal capital gains distributions, making it attractive in taxable accounts.

Risks & Limitations to Consider

1) Liquidity and Scale

SCHB's AUM (approximately $35 billion) is less than that of VTI or SPY, and its trading volume sometimes falls behind. It might concern major investors, but it isn't an issue for the majority of users.

2) Small-Cap Sensitivity

Its investment in small and mid-cap stocks offers long-term growth possibilities but comes with a bit more volatility, particularly during market declines.

3) Market Leadership Exposure

With ~30% in tech sector stocks, SCHB's performance may hinge disproportionately on mega-cap leadership cycles, less diversified than broader global equity strategies.

4) Limited Frills

In contrast to funds such as SCHG, SCHB does not favour growth or dividend yield; it serves solely as a market-cap weighted representation.

Is SCHB ETF Right for You?

Ideal Scenarios

• Core holding for a long-term, low-cost U.S. equity allocation

• Particularly appealing if you use a brokerage and aim for simplicity

• Best for investors seeking broad exposure with minimal maintenance

Less Ideal

• If you want direct exposure to international equities, ESG factors, or sector tilts

• If you prefer higher dividend income, where VYM or SCHD might outperform

• For ultra-large portfolios where liquidity constraints matter

Expert Takes & Market Commentary

Medium and long-term reviews continue to recognise SCHB as a go-to core ETF. U.S. News named it one of the "best Schwab ETFs to buy in 2025", citing its low cost and consistent returns across categories.

Experts call SCHB a top choice for passive total market exposure, distinguishing it by cost efficiency and simplicity compared to VTI or ITOT.

However, some analysts contend that SCHB does not match the scale and volume of VTI or SPY, potentially lagging in performance during extended large-cap rallies because of its wider exposure.

How to Position SCHB in Your Portfolio

• Core allocation: Consider using SCHB as your primary U.S. equity position, complemented by bond funds or international ETFs.

• Tax efficiency strategy: Hold SCHB in taxable accounts to maximise capital gains efficiency.

• Cost-conscious build: Its 0.03% fee is ideal for cost-averse investors maximising compounding over time.

• Diversification: Position alongside other ETFs (e.g., international equities or high-dividend ETFs) for comprehensive balance.

Conclusion

In conclusion, SCHB ETF is a compelling choice for many investors, offering broad U.S. equity exposure at one of the lowest possible costs. Its performance in 2025 remains strong, matching or slightly trailing VTI and ITOT, while its 0.03% expense ratio is consistently appealing.

For long-term buy-and-hold investors, especially those embedded within Schwab's ecosystem, SCHB makes an excellent core holding. It combines diversification, low cost, and performance.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.