It looks like Charles Schwab (SCHW) has a hit on its hands with its line of proprietary ETFs. As of this month, the well-known broker and now ETF provider has surpassed the $1 billion mark in assets under management just five months after they launched.
Naturally, the provider is pleased. Peter Crawford, senior vice president in the investment management services group, says Schwab had ambitious hopes for its ETFs when they launched and those hopes have largely been realized.
“Seeing those flows coming in, combined with the trading activity has been really encouraging, and the ‘everyone trades free’ concept has been a real hit,” he says. The most popular fund is Schwab U.S. Broad Stock Market (SCHB), but five of the eight ETFs available have more than $100 million in assets.
Crawford says Schwab feels that its best days may be ahead, since many investors and advisors tend to take a “wait-and-see” approach to new products. “As we approach the six-month mark, I think we’ll see that growth continue or accelerate.”
Schwab is happy with its position as a provider of funds in core categories that can play important roles in client portfolios. “Two things drive that – one of the exceptional pricing; the other is the Schwab brand and the relationship we have with our clients,” which is everyone from mom and pop investors to hedge funds and RIAs.
Schwab has no designs on taking over the ETF world. Crawford says that Schwab is first and foremost a broker, and they want to help their clients find that balance, whether it’s in buying one of the Schwab ETFs or another provider’s fund.
That doesn’t mean they’re done with launching new funds. They hope to further expand the product line, but don’t expect any exotic offerings – any new issues will still be in the core category.
The ETFs have not only delivered in terms of strong reception by the market, but in performance, as well. SCHB is up 7.8% year-to-date, ahead of the S&P’s 7.1%. Schwab U.S. Small-Cap (SCHA) is the top performer so far this year, up 13.1%, reflecting the strength of small-caps coming out of recessions.
Schwab’s eight ETFs are:
- Schwab U.S. Broad Stock Market (SCHB), 0.08% expense ratio
- Schwab U.S. Large-Cap (SCHX), 0.08% expense ratio
- Schwab U.S. Small-Cap (SCHA), 0.15% expense ratio
- Schwab International Equity (SCHF), 0.15% expense ratio
- Schwab U.S. Large-Cap Growth (SCHG), 0.15% expense ratio
- Schwab U.S. Large-Cap Value (SCHV), 0.15% expense ratio
- Schwab International Small-Cap Equity (SCHC), 0.35% expense ratio
- Schwab Emerging Markets Equity (SCHE), 0.35% expense ratio