SCHG ETF Underperforms in 2026 Compared to S&P 500 and QQQ

The Schwab U.S. Large-Cap Growth ETF (SCHG) has delivered impressive returns over the past decade, achieving a 445% return compared to the S&P 500's 254%. However, in 2026, the performance narrative has shifted dramatically, with SCHG only up about 9% year-to-date. In contrast, the S&P 500 (SPY) has returned approximately 13%, and the Nasdaq 100 (QQQ) has surged nearly 19%. This underperformance raises questions for investors who have relied on dollar-cost averaging into SCHG, especially those close to retirement who may face sequence-of-returns risk.

SCHG is designed to capture the growth of large American companies, yet its current performance indicates a struggle to keep pace with broader market indices. The fund, which manages around $61 billion, is heavily concentrated, with the top ten holdings making up about 57% of its assets. This concentration has historically benefited investors but now poses a risk as market leadership broadens beyond these few companies.

The S&P 500 includes a wider array of sectors, such as industrials and healthcare, which have contributed to its recent rally, while SCHG lacks exposure to these areas. The Nasdaq 100, despite its focus on growth, has also outperformed SCHG due to its inclusion of companies that have thrived in the current market environment.

For investors in the accumulation phase, the current dip may present an opportunity to buy more shares at lower prices, potentially benefiting from future market recoveries. However, those nearing retirement must be cautious, as the time to recover from losses is limited. Financial professionals emphasize the importance of understanding one’s investment timeline and adjusting strategies accordingly.

Investors who have held SCHG for several years may need to reconsider its role in their portfolio, possibly treating it as a satellite holding rather than a core investment. A more diversified approach, such as investing in a plain S&P 500 fund, may offer better risk management and potential for growth in the current market landscape.

Ultimately, the performance of SCHG in 2026 highlights the importance of aligning investment strategies with individual timelines and market conditions, ensuring that decisions are informed and reflective of current realities.