Charles Schwab (NYSE: SCHW), the largest U.S. discount brokerage firm, continued its torrid pace of exchange traded funds asset-gathering in the third quarter thanks to increased inflows from retail investors and traders.
At the end of the third quarter, ETF assets custodied at Schwab reached $216 billion, a 20% year-over-increase, according to the firm’s third-quarter snapshot. Flows to ETF assets custodied at Schwab hit $4.2 billion during the third quarter, bringing the year-to-date total to $14.2 billion, according to the firm’s quarterly snapshot released Monday.
The bulk of Schwab’s third-quarter ETF flows, 61% to be precise, went to equity-based ETFs with another 16% going to fixed income products. Among bond ETFs, Schwab clients displayed a preference for intermediate bond funds. That is a reversal from what was seen in the first quarter when nearly 60% of inflows by Schwab clients went to bond ETFs.
“Retail traders captured 12% of the 12-month ETF flows, up from just 6% in the prior year,” according to Schwab.
Last month, Schwab unveiled a massive expansion of its Schwab ETF OneSource commission-free ETF platform by adding 65 new ETFs and seven new issuers.
New providers joining OneSource are ALPS, Direxion Investments, Global X Funds, IndexIQ, PIMCO, ProShares and WisdomTree (NasdaqGS: WETF). Those firms join OneSource’s 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. [Schwab Bolsters Commission-Free ETF Lineup]
There are now 182 ETFs available on Schwab ETF OneSource. According to a recent Schwab study, “85 percent of investors believe that the ability to trade ETFs without commissions is important. When it comes to evaluating commission-free ETF offerings, choice is paramount. Sixty-nine percent of investors say that having the right selection of ETFs matters most, and 59 percent say that having ETFs that span the broadest number of asset categories is important,” said the firm. At the end of the third quarter, there were $19.4 billion in assets on the OneSource platform. [Popular ETFs on Schwab OneSource]
Schwab’s own lineup of 21 ETFs has also proven popular with cost-conscious investors. For example, the Schwab Emerging Markets Equity ETF (NYSEArca: SCHE), Schwab U.S. Broad Market ETF (NYSEArca: SCHB) and the Schwab US Dividend Equity ETF (NYSEArca: SCHD) all have well over $1 billion in assets under management.
Graphs Courtesy: Charles Schwab
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of SCHD.