How low can fund costs go? To zero, at least temporarily, according to Charles Schwab.
The firm announced Friday it was launching three new equity index funds and waiving the lower single-digit expense ratios through June 30, 2018.
They are the Schwab U.S. Large Growth Index Fund (SWLGX), Schwab U.S. Large-Cap Value Index Fund (SWLVX) and Schwab U.S. MidCap Index Fund (SWMCX). All three are based on Russell benchmark indexes: the Russell 1000 Growth Index, Russell 1000 Value Index and Russell MidCap Index, and they are expected launch on or about Dec. 20.
Jonathan de St. Paer, Head of Strategy and Product at Charles Schwab Investment Management, tells ThinkAdvisor that the temporary fee waiver is aimed at attracting assets early on to jumpstart growth. “The focus is on making sure to get the product known and assets coming in,” says de St. Paer.
After mid-2018, the two large-cap funds will charge an operating expense ratio of four basis points (0.04%), while the mid-cap fund will charge five basis points (0.05%). There are no investment minimums.