Schwab’s ETF Select List Dumbs It Down

February 24th at 3:00pm by Tom Lydon

Charles Schwab today unveiled a new system that dumbs down the exchange traded fund (ETF) selection process for investors who are overwhelmed by the sheer number of choices available these days.

The ETF Select List gives investors a choice of low-cost, pre-screened ETFs that represent 48 asset classes, making it far easier for investors to find ETFs that track certain market segments.

Schwab highlights just one ETF in each category, chosen based on specific criteria including expense ratio, risk, structure and how well it fits into its category. To make the first round of selection, an ETF has to meet minimum criteria that include assets under management, track record, trading volume, bid-ask spread, tracking error and the number of competitive market makers.

The brokerage cautions that the list isn’t an exhaustive one and that there are many high-quality ETFs out there that would be a good fit for investors.

Schwab’s move is a smart one, given that a recent Cogent Study showed that 7 out of 10 investors don’t even know what an ETF is. For those getting their first exposure to the market, the list of more than 1,000 funds could overwhelm even the most savvy investor.

For the average investor disenchanted with the markets, the poor performance and high fees many mutual funds tout, Schwab’s list is a simple tool they can use to find high-quality ETFs and get diversification in their portfolios.

However, more and more advisors and seasoned investors are deciding that ETFs are their vehicle of choice when it comes to getting exposure in the markets. For those investors, they may want to have more choices available and have the ability to dig deeper. To do that research, we have a variety of ETF research tools on our site.

The ETF Analyzer is completely free to use, but premium members have the ability to further customize what criteria they use to sort ETFs. The ETF Resume is also free, and on it you’ll find tearsheets, customizable charting, top holdings and so much more.

That’s not all we offer. Here are all the powerful research tools you’ll have access to as a premium member!

The bottom line is, we know that investing in ETFs can benefit any investor, but education and keeping things simple is the top priority. If that’s what you’re looking for, we provide that.

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.

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