Schwab's [profile] no-commission ETF strategy seems to be working.

During the third quarter, the discount broker has seen year-over-year a 22 percent rise in ETF client assets held in custody by Schwab clients, reaching $179 billion at the end of September, according to Beth Flynn, vice president of third-party ETF platform management at Charles Schwab. Out of that, Schwab Fundamental Index ETF strategies represented $14.2 billion in assets.

Here is an interesting detail Flynn noted: the 121 ETFs currently offered on Schwab's non-commission ETF trading platform, ETF One-Source, while they account for roughly 8 percent of the ETFs offered for trading on Schwab platforms, accounted for close to half of all the flows since the platform's launch in February. The lineup of products offered on the non-commission platform was expanded earlier this month.

"This was the highest level of growth among client assets," she said during the media call.

An important area of potential growth was retail investors, she said. For example, this group accounted for 6 percent of flows in the quarter, up from 2 percent a year ago. While this share is still small, the population of retail investors is huge, so each percentage point of growth can have "a huge impact on flows."

Flynn said that the star of Q3 flows was, of course, equities, largely large cap or international, with a heavy focus on individual country exposure. Big sectors included financial, health and technology.

Outflows were seen in fixed income, real estate and commodities. The one important exception, representing a big change, retail investors are buying gold again.

Flynn said that growth was expected in the coming quarters in the value-added categories, including smart or enhanced beta, alternative weight, low vol and asset allocation categories. 

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