The exchange traded fund universe has quickly expanded, and to provide a better glimpse of the rapid growth in the ETF industry, Charles Schwab has kept a finger on the pulse through its widely utilized trading platform.
ETF Trends publisher Tom Lydon spoke with Heather Fischer, V.P. of ETF Platform Management at Charles Schwab, and Anthony Davidow, V.P. of Alternative Beta & Asset Allocation Strategist at the Schwab Center for Financial Research, at the Inside ETFs conference that ran Jan. 22-25, 2017 to talk about trends they are seeing on the Charles Schwab platform.
“We continue to see an embracing of ETFs in both our retail and RIA client,” Fischer said. “I see a trend that was different this year was a rotation home for both of them. We saw a lot more flows into U.S. equities and U.S. fixed income than we saw the previous year, and a drop in flows in terms of international equities.”
Schwab has also expanded its commission-free ETF platform to help grow ETF assets and help investors generate higher overall returns by reducing the cost of trades.
“We continue to see the platform grow,” Fischer said. “The ETF OneSource started almost four ago with just over a hundred ETFs on the platform. As of now, we’re at 228. We started with six providers and we’re now at 16 – our most recent addition being OppenheimerFunds.”
As the ETF industry continues to grow, indexing or has been evolving alongside the changing ETF landscape. Davidow pointed out that ETFs started off with traditional beta indexing, or indexing 1.0, but has quickly evolved into more dynamic structure, or indexing 2.0.
“As we get into 2.0, which is very exciting with smart beta and all these complex products, we understand that individual investors in particular need to understand what’s going on under the hood,” Davidow said.
Unlike traditional beta-indexed market capitalization-weighted funds, these smart beta ETFs track customized indices based on specific factor investments