Why SCHG is a 'Forever Holding' for Tech-Driven Growth Investors

In an era defined by technological disruption, the Schwab U.S. Large-Cap Growth ETF (SCHG) stands out as a compelling "forever holding" for investors seeking exposure to the secular forces reshaping the global economy. With its concentrated focus on dominant tech firms and a low-cost structure, SCHG offers a vehicle to capitalize on long-term growth while mitigating some of the risks inherent in volatile markets. Here's why this ETF deserves a permanent place in growth-oriented portfolios.

A Tech Powerhouse Portfolio

SCHG's top holdings—NVIDIA, Microsoft, Apple, Amazon, and Meta—collectively account for nearly 32% of its assets, positioning it at the epicenter of transformative trends like artificial intelligence, cloud computing, and digital transformation.

. These companies are not just market leaders but pioneers in industries that will define the next decade of innovation.

• NVIDIA (11.44% of portfolio): The AI chip leader is a linchpin of the generative AI revolution, with its H100 GPUs powering everything from self-driving cars to enterprise-scale data analytics.
• Microsoft (10.92%): Azure's dominance in cloud infrastructure and the rise of AI tools like Copilot underscore its role in the $1.5 trillion cloud market.
• Apple (9.39%): Its ecosystem of iPhones, services, and emerging AR/VR technologies continues to drive recurring revenue streams.

The ETF's top five holdings are all beneficiaries of secular tailwinds: cloud adoption, data proliferation, and the shift to software-driven economies. This concentration, while a potential risk in the short term, becomes an advantage over decades as these firms scale their monopolistic advantages.

Proven Performance Through Cycles

SCHG's historical returns validate its growth thesis. The ETF has delivered a 15.88% annualized return over 10 years, outperforming the broader market and its underlying index. Even in 2025's volatile start, the fund's YTD decline of -1.01% was muted compared to the broader S&P 500's struggles, reflecting its focus on high-margin tech businesses.

This chart illustrates how growth-focused firms have historically outperformed during innovation booms. While SCHG may underperform in bear markets (e.g., during the 2022 tech selloff), its long-term trajectory aligns with the compounding power of technology.

Cost Efficiency: A Margin of Safety

With an expense ratio of just 0.04%, SCHG offers a stark contrast to pricier peers like the Invesco S&P 500 Growth ETF (SPYG), which charges 0.13%. Over a 30-year horizon, this difference could save an investor $14,000 on a $10,000 initial investment—highlighting the power of compounding cost savings.

Low fees ensure that more of the ETF's returns flow to investors rather than management, a critical factor in a competitive landscape.

Diversification in Disguise

While SCHG's top five holdings dominate its portfolio, the fund holds 231 stocks in total, spreading risk across industries like software, semiconductors, and e-commerce. This structure avoids overexposure to any single company while maintaining a growth-oriented tilt. For example, mid-sized tech players like Snowflake (1.2%) and CrowdStrike (0.9%) complement the giants, ensuring the ETF isn't overly reliant on a handful of names.

Addressing the Bear Case: Volatility vs. Secular Trends

Critics argue that growth stocks are inherently risky due to their valuation premiums and sensitivity to interest rates. SCHG's YTD decline in 2025 underscores this volatility. However, three factors mitigate this risk:

1. High reinvestment rates: Tech giants like Microsoft and NVIDIA generate massive free cash flow, which they reinvest in R&D and acquisitions, creating a moat against competition.
2. Structural demand: Cloud computing spending is projected to hit $947 billion by 2026, while AI's total addressable market could exceed $15 trillion by 2030—securing growth for decades.
3. Dividend growth: Even "growth" companies like Apple and Microsoft have raised dividends steadily, adding income stability to their equity returns.

This graph shows Azure's revenue surging from $1.6 billion in 2015 to $100 billion in 2025—proof of execution in a key secular trend.

The Case for Forever Holding Status

SCHG's blend of concentration in high-conviction tech names, diversification across 231 holdings, and low costs creates a compelling "set it and forget it" investment. For investors with a 5+ year horizon, the ETF's alignment with the tech-driven economy justifies its place as a core holding.

Actionable Advice:
- Buy and hold: Allocate 10–15% of a growth portfolio to SCHG, rebalancing only during extreme overvaluations (e.g., a P/E ratio above 30).
- Pair with sector ETFs: Use SCHG as the core and supplement with sector-specific funds like the Invesco QQQ (QQQ) for semiconductor exposure or the iShares U.S. Cloud Computing ETF (CLOU).
- Monitor secular trends: Track metrics like cloud adoption rates, AI compute demand, and software revenue growth to gauge the ETF's underlying health.

Conclusion

In an era where technology reshapes every industry, SCHG offers a direct link to the companies driving that change. Its concentrated tech exposure, low fees, and resilience through cycles make it a rare candidate for permanent portfolio inclusion. While volatility is inevitable, the secular tailwinds behind its holdings ensure that SCHG remains a growth investor's best friend for years to come.

This comparison shows that SCHG's higher returns have come with comparable volatility, reinforcing its role as a superior growth vehicle.

Investors who prioritize long-term compounding over short-term noise will find SCHG a cornerstone of their "forever" portfolios.