Charles Schwab Investment Management (CSIM) moved to expand its ETF menu on Thursday, serving up an emerging markets equity ETF and an international small-cap equity ETF to round out its ETF offerings at six. Meanwhile, the board of trustees of the Schwab ETF Trust greenlighted the termination of the 12b-1 Plan for all Schwab ETFs.
The Schwab Emerging Markets Equity ETF (SCHE) and the Schwab International Small-Cap Equity (SCHC), which began trading Thursday, both carry an expense ratio of 35 bps.
The emerging markets fund, which tracks the performance of the FTSE All-Emerging Index, focuses on companies spanning 22 emerging markets, with the portfolio overweight Brazil and China and significant holdings allocated to India and Taiwan as well. The international small-cap fund follows the FTSE Developed Small Cap ex U.S. Liquid Index, investing in small-cap stocks across 24 developed markets (except for the U.S.), with the largest holdings in Canada.
Though late to the ETF party, Schwab's entrance to the space in November nonetheless created a stir in the industry in part because of the firm's decision to make online trades of its proprietary ETFs commission-free. Schwab initially rolled out four ETFs including the U.S. Broad Market, U.S. Large-Cap, U.S. Small-Cap, and International Equity ETFs. A month later, the firm followed up by unveiling two large-cap ETFs – the U.S. Large-Cap Growth ETF and the U.S. Large-Cap Value ETF.
Schwab's first six ETFs collectively hold $419 million.
Company Press Release
SAN FRANCISCO - (Business Wire) Charles Schwab Investment Management, Inc. (CSIM) has launched its seventh and eighth exchange-traded funds with low operating expense ratios and commission-free online trading in Schwab accounts. The latest two are the *Schwab Emerging Markets Equity ETF (SCHE)* and the *Schwab International Small-Cap Equity ETF (SCHC)* and they begin trading on Jan. 14^th , 2010.
The first four Schwab ETFs — U.S. Broad Market (SCHB), U.S. Large-Cap (SCHX), U.S. Small-Cap (SCHA) and International Equity (SCHF) were launched Nov. 3. In addition, the Schwab U.S. Large-Cap Growth ETF (SCHG) and the Schwab U.S. Large-Cap Value ETF (SCHV) were launched on Dec. 11.
As of Jan. 12, CSIM had $419 million in assets under management in the first six Schwab ETFs, and trading volume has increased steadily across the six ETFs since inception.
“Individual investors and investment advisors count on Schwab for products that provide exceptional value, and our clients have indicated an interest in ETFs as a way to invest in and trade entire segments of the market,” said Peter Crawford, senior vice president at Charles Schwab & Co., Inc. “These two new ETFs allow investors to access emerging markets equities and international small-cap equities. And commission-free online trades make the Schwab ETFs an even more cost-effective investment.”
The new Schwab ETFs have some of the lowest expense ratios in the market for funds with similar objectives — the two new funds each have an expense ratio of 0.35 percent. Like the first six funds, the two new Schwab-managed ETFs can be bought and sold commission-free online in Schwab accounts.
"We are extremely pleased with the successful launches of our new suite of Schwab ETFs,” Crawford said. “The compelling value proposition combined with the steady trading volumes since inception and relatively tight bid/ask spreads have resulted in strong adoption by both retail investors and independent investment advisors. We are committed to supporting and growing these new products and relationships."
Commission-free online trading of Schwab ETFs is available to individual investors at Schwab, to the more than 6,000 independent investment advisors who use Schwab’s custodial services and through Schwab retirement accounts that permit trading of ETFs.
*Elimination of 12b-1 Plan*
The Board of Trustees of the Schwab ETF Trust approved the termination of the Distribution and Shareholder Services (12b-1) Plan for all proprietary ETFs. This change was filed with the SEC on January 13, 2009.
“We have eliminated our Rule 12b-1 plan to simplify our pricing and remove the potential additional costs,” said Crawford. “This change reaffirms our commitment to providing clients with optimal value in our relationship with them.”
*About Charles Schwab Investment Management*
Founded in 1989, Charles Schwab Investment Management, Inc., a subsidiary of The Charles Schwab Corporation, is one of the nation's largest asset management companies with approximately $210 billion in assets under management as of Sept. 30, 2009. It is among the country's largest money market fund managers and is the third-largest provider of retail index funds. In addition to managing Schwab Funds, CSIM is investment adviser for the institutional-style, sub-advised Laudus Fund family. CSIM currently manages 76 mutual funds, including 33 actively-managed funds, in addition to six ETFs and four separate account model portfolios.
*About Charles Schwab*
The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.7 million client brokerage accounts, 1.5 million corporate retirement plan participants, 706,000 banking accounts, and $1.4 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Named "Highest in Investor Satisfaction with Self-Directed Services" by J.D. Power and Associates, its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC , www.sipc.org ), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com . (0110-0466)
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