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Schwab launches target date mutual funds constructed with Schwab ETFs


Charles Schwab Investment Management (CSIM) has launched the Schwab Target Index Funds – a series of index-based target date mutual funds constructed with low-cost Schwab ETFs as underlying investments.

The new funds are the lowest-cost target date mutual funds available to employer-sponsored retirement plans, with an across-the-board expense ratio of just eight basis points (0.08 per cent) and no minimum investment requirements regardless of plan size.
Until now, receiving the most competitive pricing on target date funds could require a USD100 million minimum investment or more from retirement plans.
Outside of retirement plans, Schwab Target Index Funds are also among the lowest-cost target date mutual funds available to individual investors at 13 basis points (0.13 per cent) with only a USD100 minimum investment.
The new series includes funds with target retirement dates between 2010 and 2060 in five-year increments.
Schwab’s TDF suite, first launched in 2002, includes mutual funds and collective trust funds, open architecture construction and active and passive strategies.
“Today marks an important day of democratisation for employers, retirement plan participants and self-directed individual investors,” says Marie Chandoha, president and chief executive officer of Charles Schwab Investment Management. “With Schwab Target Index Funds, every retirement plan gets the same low price with no investment minimums. That means plan participants no longer have to pay for a more expensive target date fund just because they work at a smaller company. On the retail side, we’re proud to offer individual investors a professionally managed retirement solution at an exceptionally low price. As the latest example of Schwab’s long history of driving down costs, these new funds are important milestones for our industry, and great news for retirement savers.”

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