Schwab Lowers ETF Fees, Attacks Rivals

Updating ETF news and offerings in the marketplace

   

Schwab Lowers ETF Fees, Attacks Rivals

In an aggressive move to attract more assets, Charles Schwab (NYSE:SCHW) reduced the annual expense ratios on its 15 ETFs.

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

For large cap stocks, the Schwab U.S. Large Cap Fund (NYSE:SCHX) charges just 0.04% versus 0.10% for the Vanguard Large Cap Fund (NYSE:VV) and 0.09% for the SPDR S&P 500 ETF (NYSE:SPY).

Lower fees could help SCHX and other Schwab ETFs to garner more money from investors as they switch to lower cost funds. At the beginning of September, SCHX has less than $1 billion under management compared to $5.9 billion in VV and $105 billion. (VIDEO: Municipal Bonds: Myth vs. Reality)

The company launched the first Schwab ETFs in November 2009 and was the first broker to introduce commission-free online trading of ETFs in client accounts. Since then, Schwab ETFs have grown to over $7.2 billion in assets under management as of August 31, 2012.  The ETFs offer market exposure to U.S. stocks (NYSE:SCHB), international stocks (NYSE:SCHF), and U.S. TIPS (NYSE:SCHP).

“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,” said Bettinger.

Altogether, the San Francisco, CA-based brokerage firm managed a total of $142 billion in ETF assets at the end of August 2012.

Schwab ETFs 

ETF Ticker Asset Class New Expense Ratio
SCHB U.S. Total Stock Market 0.04%
SCHX U.S. Large Cap 0.04%
SCHG Multicap Growth 0.07%
SCHV U.S. Large Cap Value 0.07%
SCHD U.S. Equity Income 0.07%
SCHM U.S. Mid Cap 0.07%
SCHA U.S. Small Cap 0.10%
SCHH U.S. REITs 0.07%
SCHF Intl Large Cap 0.09%
SCHE Emerging Markets 0.15%
SCHC Intl/Small Cap 0.20%
SCHO U.S. Treasury Short Term 0.08%
SCHR U.S. Treasury Intermediate 0.10%
SCHP U.S. TIPS 0.07%

Other ETP News
Barclays (NYSE:BCS) plans a 1-for-4 reverse split of its iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) effective Thursday, October 5, 2012.

The record date for the reverse split will be the close of business, New York time, on October 4, 2012.  The closing indicative value of the ETN on the record date will be multiplied by four to determine the reverse-split adjusted value of the ETN.

The reverse split will be effective at the open of trading on October 5, 2012 and the reverse-split adjusted ETNs will have a new CUSIP, but will retain the same ticker symbols.

Investors who, as of the record date, hold a number of ETNs that is not divisible by four will receive one reverse-split adjusted ETN for every four ETNs held on the record date and a cash payment for any odd number of ETNs remaining.

The cash amount due on any odd lots will be determined on October 12, 2012, based on the closing indicative value of the reverse-split adjusted ETNs on that date and will be paid by Barclays Bank PLC on October 17, 2012.



Article printed from InvestorPlace Media, http://investorplace.com/2012/09/schwab-lowers-etf-fees-attacks-rivals-schw-spy-vv-bcs-schx-schb-schp/.

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