Earlier this month, Charles Schwab (NYSE: SCHW), one of the largest discount brokers in the U.S., unveiled a significant expansion of its Schwab ETF OneSource commission-free exchange traded funds platform.
Already substantial in terms of number of offerings, OneSource added 65 from various issuers to Schwab ETF OneSource, bring the number of commission-free offerings on the platform to 182. Seven ETF providers — ALPS, Direxion Investments, Global X Funds, IndexIQ, PIMCO, ProShares and WisdomTree (NasdaqGS: WETF) – joined OneSource. [Schwab Expands Commission-Free ETF Lineup]
With original members State Street (NYSE: STT), Guggenheim, Invesco’s (NYSE: IVZ) PowerShares, ETF Securities, U.S. Commodity Funds and Schwab’s own lineup of ETFs, OneSource now offers select ETFs from 13 issuers on a commission-free basis. The entire list can be viewed here.
With that in mind, we decided to have a look at some of the more well-known commission-free offerings on the Schwab platform, an endeavor we will repeat in the future with the commission-free platforms from Fidelity and TD Ameritrade.
Our list is agnostic in terms of asset class and issuers. Let’s get started with the…
PowerShares Buyback Achievers Portfolio (NYSEArca: PKW)
Assets under management (AUM): $2.76 billion
Comment: Although PKW is nearly eight years old, it has really grown in prominence over the past year, hauling in $794.2 million of its $2.76 billion in assets under management. With an annual fee of 0.68%, PKW is a tad pricey compared to some plain vanilla broad market ETFs, so the ability to access the fund without paying commissions should prove attractive to some investors. It should be noted that PKW’s fee is not a deterrent. The ETF has established a cult following while outpacing the S&P 500 by 1,130 basis points over the past three years. [Buyback ETF in a Familiar Spot]
Schwab U.S. Large-Cap Value ETF (NYSEArca: SCHV)
AUM: $1.2 billion
Comment: As we noted at the outset, each and every Schwab ETF is available to the firm’s clients on a commission-free basis. That includes SCHV, which has proven sturdy this year as investors have embraced value stocks and funds. Not only is SCHV a value play, but it is a valid idea for the frugal investor. The ETF’s 0.07% expense ratio is downright paltry among U.S. large-cap ETFs.
SPDR S&P International Dividend ETF (NYSEArca: DWX)
AUM: $1.45 billion
Comment: Nearly 50 international ETFs, including new funds, are featured on OneSource. DWX is one of the largest of those offering. DWX has a dividend yield of 5.2% and the bulk of its weight is allocated to developed markets. The U.K., Australia and Canada, solid ex-U.S. developed market dividend destinations, combine for over 45% of DWX’s weight. [International Dividend ETF Powers Up]
WisdomTree U.S. Dividend Growth Fund (NasdaqGM: DGRW)
AUM: $132.1 million
Comment: The fast-growing DGRW (its AUM is up 32% since March) is one of a plethora of U.S. and international dividend ETFs available sans commissions on OneSource. DGRW charges just 0.28% per year, so skirting trading costs is a nice bonus. As is the fact that DGRW has already shown a penchant for beating some its older rivals. [Looking Forward, A Growing Dividend ETF Basks in Out-Performance]
Guggenheim S&P Equal Weight Energy ETF (NYSEArca: RYE)
AUM: $219.2 million
Comment: Guggenheim is the one of the original members of the OneSource platform and as such, is well-represented there. That representation includes the firm’s entire lineup of nine equal-weight U.S. sector ETFs. RYE has gained acclaim because the ETF is not excessively weighted Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) as are its cap-weighted counterparts.
ETFS Physical Palladium Shares (NYSEArca: PALL)
AUM: $475 million
Comment: PALL is one of a small number of hard assets ETFs currently offered on OneSource, but along with its stablemate, the ETFS Physical Platinum Shares (NYSEArca: PPLT), PALL is also one of the largest commodities ETFs on the platform. PALL is off 13% over the past month due in large part to the surging U.S. dollar.
ALPS Sector Dividend Dogs ETF (NYSEArca: SDOG)
AUM: $831.6 million
Comment: SDOG tries to reflect the performance of the S-Network Sector Dividend Dogs Index, which applies the “Dogs of the Dow Theory” on a sector-by-sector basis using the S&P 500 with a focus on high dividend exposure. Top holdings include Dow component DuPont (NYSE: DD), Altria (NYSE: MO) and Exelon (NYSE: EXC).
PIMCO 0-5 Year High Yield Corporate Bond (NYSEArca: HYS)
AUM: $4 billion
Comment: Some junk bond ETFs have seen billions of dollars of outflows this year as investors have become skittish about the potential for rising interest rates. Not HYS. With an effective duration of just two years, low by the standards of high-yield bond ETFs, the ETF has swelled in size as investors have sought lower duration options for remaining in the junk bond ETF game. [Short Duration Junk Bond ETFs in the Limelight]
Schwab Emerging Markets Equity ETF (NYSEArca: SCHE)
AUM: $1.3 billion
Comment: For the emerging markets investor that counts every penny, it does not get any better than SCHE. Not only does Schwab waive commissions on this ETF, but with an annual fee of 0.14%, SCHE is also slightly less expensive compared to the rival Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO).
ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL)
AUM: $242.3 million
Comment: One of the most successful ETFs to debut last year, NOBL is another of the many dividend offerings available on OneSource. NOBL tracks the S&P 500 Dividend Aristocrats Index, which only includes companies that have increased their dividends for at least 25 consecutive years.
However, the ETF’s emphasis on mature dividend payers does not translate to an emphasis on high-yielding companies with stretched payout ratios. For example, the average payout ratio of NOBL’s top-10 holdings at the end of the second quarter was just 37.9%.