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Schwab to launch the Schwab Municipal Bond ETF

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Schwab Asset Management, the asset management arm of The Charles Schwab Corporation in the US, has announced the launch of the Schwab Municipal Bond ETF (NYSE Arca: SCMB). The first day of trading is expected to be on or about October 12.

With an expense ratio of 0.03per cent, the Schwab Municipal Bond ETF comes to market at a lower cost than comparable funds, the firm says. This ETF provides access to the broad US investment grade, tax-exempt bond market with the additional benefit of potentially higher tax efficiency of its ETF structure. It can serve as part of the core of a diversified portfolio.

“As bond yields have risen, fixed income investing is more attractive than it has been in years, making this an opportune moment to introduce a new choice for investors seeking a low-cost, straightforward approach to income, diversification and risk management in their portfolios,” says John Sturiale, Head of Product Management and Innovation, Schwab Asset Management. “With the launch of the Schwab Municipal Bond ETF, we at Schwab Asset Management are extending our legacy of low-cost leadership and expanding our well-established line-up of bond ETFs that can play an important role in a diversified portfolio.”

The Schwab Municipal Bond ETF’s goal is to track as closely as possible, before fees and expenses, the total return of the ICE AMT-Free Core US National Municipal Index, which measures the performance of the US AMT-free municipal bond market. It seeks to provide income exempt from federal taxes and not subject to the federal alternative minimum tax (AMT). The fund has a high credit quality profile, investing only in investment-grade rated securities.

The fifth largest provider of ETFs, Schwab Asset Management has more than a decade of experience managing ETFs and writes that it has a robust capital markets team that plays a crucial role in ensuring the Schwab ETFs function efficiently. Schwab bond ETFs seek to be among the lowest cost across the industry’s leading ETF providers. The Schwab Municipal Bond ETF is Schwab Asset Management’s eighth bond ETF and the 29th Schwab ETF overall.

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