In an industry dominated by a few companies, some exchange traded fund providers have found success in cutting fees and attracting long-term investors.
For instance, Charles Schwab & Co. is emerging as one of the fastest growing ETF providers, reports John Waggoner for InvestmentNews.
Schwab’s 21 ETFs have garnered a net $6.9 billion through June 30, according to Morningstar data. Over the past year, these funds saw assets grow 39.7% to $47.9 billion.
The discount broker is also riding on the overall success of the ETF industry as more investors turn to passive, index-based ETFs to gain market exposure. According to Schwab’s trading platform data, there was an 11.3% increase to $287.4 billion in ETF assets held in client accounts.
Fueling the growth in Schwab’s ETFs, the company has aggressively undercut competitors in a bid to entice investors, and it seems to be working. For instance, the Schwab U.S. Large-Cap ETF (NYSEArca: SCHX) and Schwab U.S. Broad Market ETF (NYSEArca: SCHB), with both coming in at a low 0.03% expense ratio, are among the cheapest U.S.-listed ETF options.[related_stories]
To put this in perspective, the average expense ratio on U.S.-listed ETFs is 0.58%, according to XTF data.
“We’ve been price leaders for some time,” Schwab spokesman Greg Gable told InvestmentNews. “We have every intention of being competitive on price and we know price matters to investors in this space. We don’t want price to be the inhibiting factor in someone choosing our products and a relationship at Schwab.”
The combination of low-cost and strong performances have made Schwab ETFs attractive options for any investor.
For instance, Morningstar director of global ETF research, Ben Johnson, recently singled out the Schwab US Dividend Equity ETF (NYSEArca: SCHD), arguing that the “fund’s high-quality portfolio and low cost make it a suitable core equity holding.”
Related: SCHD: A Dependable Dividend ETF
Moreover, Schwab has also helped steer investors to its line of ETFs and to a number of other partnered ETF providers through its commission-free ETF OneSource program.
Nevertheless, Schwab still has a ways to go before catching up to ETF industry giants like BlackRock. BlackRock’s iShares, the largest ETF sponsor, has accumulated $912 billion in assets under management while Charles Schwab, the fifth largest ETF providers, has $50.6 billion in AUM.
For more information on the ETF industry, visit our current affairs category.