This is an intermediate-term investment-grade corporate bond ETF that tracks the Bloomberg US Aggregate Credit-Corporate (5-10 Year) Index. It holds a broad range of US investment-grade corporate bonds with maturities between 5 and 10 years, seeking interest income from the intermediate duration segment.

It suits investors who want steady interest income from an asset less volatile than equities and who can tolerate the interest rate sensitivity of intermediate duration.

It is a passively managed (index-tracking) ETF run by Schwab.

The fund holds the investment-grade corporate bonds included in the index in a way that closely approximates market-capitalization weighting, tracking the performance of the broader intermediate-term corporate bond market. Holdings are rebalanced periodically according to credit rating and maturity criteria, and the fund is managed so that its weighted average duration stays similar to that of the index.

• Expense ratio lower than the category average
• Corporate bond exposure concentrated in intermediate duration

Assets under management (AUM) stand at $11.1B, and the expense ratio is 0.03% per year.

The fund is competitive on fees compared with similar category peers VCIT and IGIB, and it seeks a steady stream of interest income through diversification centered on investment-grade corporate bonds.

As with corporate bond ETFs in general, the price responds sensitively to the direction of interest rates and changes in credit spreads. Because of its intermediate duration, its price swings in response to rate moves are larger than those of shorter-term bonds, and interest income makes up a substantial portion of total return.

Fund flows vary with the rate environment and credit spreads, and money tends to flow into intermediate-term bonds when expectations of rate cuts grow. Conversely, when rates are rising, price pressure on bonds can increase volatility.

Its strengths are a low expense ratio and diversification across investment-grade corporate bonds, while price sensitivity to interest rate changes and credit risk are the main drawbacks.

VCIT, IGIB, and SPIB shown in the table are direct comparisons in the same intermediate-term investment-grade corporate bond category, with the expense ratio and issuer being the main differences. If you want longer maturity exposure, you can also consider IGLB, a long-term corporate bond ETF, and for broad diversification across the US bond market including corporate bonds, SCHZ, an aggregate bond ETF.

Here are the points to review before investing in SCHI. It is an intermediate-term corporate bond asset that seeks steady interest income, but you should thoroughly check its interest rate sensitivity, credit risk, and currency exposure before investing.

Rising interest rates and wider credit spreads are the main drivers of price declines. Given its intermediate duration, valuation gains and losses from rate changes are larger than for short-term bonds, and even investment-grade bonds can see price corrections during an economic slowdown.

It is an intermediate-term corporate bond core asset suited to investors who want steady interest income and diversification. If cost matters to you, the low expense ratio of SCHI is an advantage, and depending on your maturity preference, it is advisable to compare it alongside long-term bond or aggregate bond ETFs.