Exchange traded fund (ETF) provider and brokerage Charles Schwab has taken the bold step of slashing expense ratios on six of their eight proprietary ETFs to the lowest in their class.
The six broad-based ETFs boasting the lowest prices in their category now are:
- Schwab U.S. Broad Market (NYSEArca: SCHB), from 0.08% to 0.06%
- Schwab U.S. Large-Cap Growth (NYSEArca: SCHG), from 0.15% to 0.13%
- Schwab U.S. Large-Cap Value (NYSEArca: SCHV), from 0.15% to 0.13%
- Schwab U.S. Small-Cap (NYSEArca: SCHA), from 0.15% to 0.13%
- Schwab International Equity (NYSEArca: SCHF), from 0.15% to 0.13%
- Schwab Emerging Markets Equity (NYSEArca: SCHE), from 0.35% to 0.25%
Schwab’s ETFs are already popular with investors – after just a few months of trading, the provider’s line of core funds hit the key $1 billion in assets mark. [Schwab’s ETFs Hit $1 Billion.]
It’s clear from this move the Schwab is serious about becoming a major participant in the ETF space, especially as more research shows that both advisors and retail investors are turning their attention and dollars to ETFs.
By undercutting Vanguard, the ETF industry’s low-price leader, Schwab now offers the best economic choice for some of the major asset classes. If you have custody at Schwab as an advisor, you have little reason not to use Schwab for your ETFs. [Vanguard Fires a Pricing Shot.]
What’s next for Schwab? Look for the provider to roll out even more ETFs to further cover the core asset classes. The provider is also in a key position to launch a commission-free ETF marketplace in order to compete with the Fidelity/iShares offering. Schwab would also be wise to develop an ETF 401(k) program, now that all the tools are in place. [Fidelity Announces Free Trading.]
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.