In an aggressive move to attract more assets, Charles Schwab reduced the annual expense ratios on its 15 ETFs.
“In this period of uncertainty in the markets, the expenses investors pay are the only sure thing,” said CEO Walt Bettinger. “As a longtime advocate for investors, we want to offer our clients a truly low-cost way to build a diversified portfolio.”
For large cap stocks, the Schwab U.S. Large Cap Fund (SCHX) charges just 0.04% versus 0.10% for the Vanguard Large Cap Fund (VV) and 0.09% for the SPDR S&P 500 ETF (SPY).
Lower fees could help SCHX and other Schwab ETFs to garner more money from investors as they switch to lower cost funds. At the beginning of September, SCHX has less than $1 billion under management compared to $5.9 billion in VV and $105 billion.
The company launched the first Schwab ETFs in November 2009 and was the first broker to introduce commission-free online trading of ETFs in client accounts. Since then, Schwab ETFs have grown to over $7.2 billion in assets under management as of August 31, 2012. The ETFs offer market exposure to U.S. stocks (SCHB), international stocks (SCHF), and U.S. TIPS (SCHP).
“We’re committed to being at the forefront of the ETF industry and to making the ETF investment equation simple and smart, whether the investment is small or large,” said Bettinger.
Altogether, the San Francisco-based brokerage firm managed a total of $142 billion in ETF assets at the end of August 2012.