Charles Schwab is coping with Wall Street’s misery by adapting to the new investment environment. This includes price cutting, reducing minimums and rolling out new products, such as exchange traded funds (ETFs).
Schwab is ready to take the markets’ lemons and make lemonade. The firm is cutting prices, reducing minimum investments, and rolling out new products aimed squarely at luring customers—for what Chuck Schwab believes will be a radically different investment environment over the next few years, reports Leslie P. Nortin for Barron’s.
The provider’s namesake financial services firm is ready to handle the longer period of lower returns, higher inflation and substantial competition for funds from expanded government borrowing, not to mention the shift to overseas markets. Schwab already gets high marks for its low fees and value of its service.
In order to face the challenge, Schwab wants to offer more solid products than the competition at lower prices. Part of this push to draw in more clients. As a result, Schwab is also seeking approval from the Securities and Exchange Commission (SEC) to roll out its own family of ETFs. Proprietary ETFs are next on the list, and the company sees ETFs as a major beginning for them. They realize how popular ETFs are becoming and want to meet that demand.
By Schwab’s count, they already handle 22% of all retail-ETF inflows, and about 10% of all outstanding ETFs are held in custody there. There are 11 funds in registration.
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