Charles Schwab offers some of the cheapest ETFs on the market. The firm has launched 21 ETFs with an average expense ratio of 0.16% and its cheapest ETF offering has a 0.04% expense ratio. In comparison, the U.S.-listed ETF industry has an average expense ratio of 0.60%.
Schwab has operated as a loss leader, providing a low-cost alternative to ETF giants in the space like BlackRock, State Street Global Advisors and Vanguard. Additionally, Schwab provides commission-free trades on a large group of ETFs. [Schwab Expands Commission-Free ETF Lineup]
The low-cost strategy has allowed the financial firm to boost sales and assets in its funds to the point where liquidity and trading benefits now make them appealing to non-Schwab clients.
“There’s no compelling reason to not look at [Schwab] versus Vanguard,” Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ, said in the article. “They are worthy of being in the discussion for investors looking for well-diversified, low-cost products.”
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Max Chen contributed to this article.