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Schwab slashes ETF expenses

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Charles Schwab has slashed the operating expense ratios (OERs) for each of its 15 Schwab ETFs. The funds now offer the lowest OERs in their respective Lipper categories.

Schwab manages USD142 billion in client ETF assets as of 31 August, 2012. The company launched its own Schwab ETFs in November 2009, becoming the first to introduce commission-free online trading of ETFs in client accounts. Since then, Schwab ETFs have grown to over USD7.2 billion in assets under management as of 31 August, 2012. Schwab has a 21-year history of directly managing passive index products, with USD34.8 billion in assets under management in these investments as of 31 August, 2012.

According to CEO Walt Bettinger: “In this period of uncertainty in the markets, the expenses investors pay are the only sure thing. As a long-time advocate for investors, we want to offer our clients a truly low-cost way to build a diversified portfolio.

“It shouldn’t cost a lot for investors to do the right things with their money. Our roots are in building great tools and products for clients at affordable prices that improve the investing experience, from discount brokerage services and online trading to advice products like Schwab Managed Portfolios and commission-free online trading of our ETFs. We’re committed to being at the forefront of the ETF industry and to making the ETF investment equation simple and smart, whether the investment is small or large.”

Marie Chandoha, President of Charles Schwab Investment Management, says: “For investors, one of the keys to long-term success is constructing well-diversified portfolios that address their goals as cost-effectively as possible. We believe Schwab ETFs are a great tool for this because they provide our clients with exposure to core asset categories, and have a history of being tax efficient and performing in line with their indexes. Today’s announcement lowers one more barrier for investors who use our ETFs as the building blocks of their portfolios.”

 

The operating expense ratio changes, which took effect on 20 September, are as follows:

 

 

US Broad Market was 0.06 per cent, now 0.04 per cent
US Large-Cap was 0.08 per cent, now 0.04 per cent
US Large-Cap Growth was 0.13 per cent, now 0.07 per cent
US Large-Cap Value was 0.13 per cent, now 0.07 per cent
US Dividend Equity was 0.17 per cent, now 0.07 per cent
US Mid-Cap was 0.13 per cent, now 0.07 per cent
US Small Cap was 0.13 per cent, now 0.10 per cent
US REIT was 0.13 per cent, now 0.07 per cent
International Equity was 0.13 per cent, now 0.09 per cent
Emerging Markets Equity was 0.25 per cent, now 0.15 per cent
International Small-Cap Equity was 0.35 per cent, now 0.20 per cent
US Aggregate Bond was 0.10 per cent, now 0.05 per cent
Short-Term US Treasury was 0.12 per cent, now 0.08 per cent
Intermediate-Term US Treasury was 0.12 per cent, now 0.10 per cent
US TIPS was 0.14 per cent, now 0.07 per cent

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