Charles Schwab (NYSE: SCHW), the discount brokerage giant and eighth-largest U.S. issuer of exchange traded funds, said Monday none of its 21 ETFs will distribute capital gains this year marking the fifth consecutive year none of the firm’s ETFs have hit investors with capital gains distributions.
“ETFs are attractive to investors in part because of their tax efficient structure, and Schwab ETFs have delivered on this expectation for the past five years, with no distributed capital gains since the first Schwab ETFs launched in 2009,” said John Sturiale, Senior Vice President, Product Management, Charles Schwab & Co., Inc., in a statement. “Maintaining the highest standard of tax efficiency is an important piece of delivering on CSIM’s promise to provide investors with simple, low-cost investment products that help them achieve a well-diversified portfolio.”
Schwab’s no capital gains announcement follows similar news from rival ETF issuers. Last week ProShares, the largest issuer of inverse and leveraged ETFs, said it expects none of its nearly 130 equity and fixed income ETFs will distribute capital gains this year. [No Cap Gains for ProShares ETFs]
The no capital gains announcement from Maryland-based ProShares came just days after Invesco’s (NYSE: IVZ) PowerShares unit, the fourth-largest U.S. ETF issuer, said it expects just nine of its 116 ETFs to distribute capital gains this year.
Prior to the PowerShares announcement, of the seven large ETF providers that have published capital gains distribution estimates, including iShares, Vanguard, State Street Global Advisors, PIMCO, Guggenheim Investments and First Trust, only 74 of 712 funds will issue capital gains distributions, with many less than 1% of the ETFs’ net asset value. [Small Amount of PowerShares ETFs to Have Cap Gains]
The no capital gains announcement is the latest in a string of impressive data points out of California-based Charles Schwab this year. Schwab now has $25.9 billion in ETF assets under management and 11 of the firm’s 21 ETFs have over $1 billion in AUM, according to the statement.
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 in October.
In September, 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]
ETF Trends editorial team contributed to this post.