Schwab cuts ETF fees again, as expense war with rivals BlackRock, Fidelity and Vanguard heats up

Schwab cuts ETF fees again, as expense war with rivals BlackRock, Fidelity and Vanguard heats up
OCT 18, 2016
Charles Schwab & Co. (SCHW) re-entered the ETF fee war Friday, announcing fee cuts to five of its exchange-traded funds. While the expense cuts were modest — one basis point, or 1/100th of a percentage point — the move underscores the fierce price competition in the growing ETF market. BlackRock announced fee cuts to 15 of its iShares ETFs on Wednesday. Fidelity Investments cut its fees on 27 index funds and ETFs in June. And Schwab has been matching or beating other funds' cuts. “When individuals invest their hard-earned money, they are increasingly searching for low-cost, transparent, enduring products,” said Marie Chandoha, president and CEO of Charles Schwab Investment Management. “It's our mission to deliver on that, and we are proud that CSIM has been the catalyst for helping investors access lower cost ETFs across the industry.” Schwab last cut its ETF fees in June. Like many other discount brokerages, it charges no commissions on select ETFs.
Schwab cuts fees
Fund Ticker Former OER (BPS) New OER (BPS)
Schwab U.S. Small-Cap ETF™ SCHA 0.07% 0.06%
Schwab U.S. Mid-Cap ETF™ SCHM 0.07% 0.06%
Schwab International Equity ETF™ SCHF 0.08% 0.07%
Schwab Emerging Markets Equity ETF™ SCHE 0.14% 0.13%
Schwab U.S. Aggregate Bond ETF™ SCHZ 0.05% 0.04%
Source: Charles Schwab & Co.
"While the iShares news this week appeared to be focused on competing with Vanguard, the second-largest ETF provider, Schwab has gained market share in the past couple of years in part by being a low-cost provider of market-cap weighted equity and fixed income ETFs,” said Todd Rosenbluth, director of ETF & mutual fund research for S&P Global Market Intelligence. How low can fees go? In theory, near zero. After all, many funds make money from securities lending. And some of the largest funds are making tidy sums, even with extremely low fees. Vanguard Total Stock Market ETF (VTI), for example, charges just 0.05%. But on the fund's $469 billion in assets, that's roughly $234 million a year. And a few are actually at zero. Wisdom Tree Global Hedged Smallcap Dividend Fund (HGSD), for example, has a 0.43% expense ratio, but the fund is currently waiving expenses. Cambria Global Asset Allocation ETF (GAA) actually does have a zero expense ratio, although the funds it invests in charge 0.25%.

Latest News

Elon Musk's DOGE compromised critical Social Security data, whistleblower claims
Elon Musk's DOGE compromised critical Social Security data, whistleblower claims

A complaint by the Social Security Administration's chief data officer alleges numbers, names, and other sensitive information were handled in a way that creates "enormous vulnerabilities."

Hedge funds win review of SEC’s short sale disclosure rule
Hedge funds win review of SEC’s short sale disclosure rule

The New Orleans-based 5th Circuit has sided the industry groups arguing the commission's short-selling rules exceeded its authority.

Carlyle to acquire intelliflo from Invesco, spinning off RedBlack for US RIAs
Carlyle to acquire intelliflo from Invesco, spinning off RedBlack for US RIAs

The deal will see the global alts giant snap up the fintech firm, which has struggled to gain traction among advisors over the years, for up to $200 million

Advisor moves: LPL scoops up $700M Wedbush team in Texas
Advisor moves: LPL scoops up $700M Wedbush team in Texas

Elsewhere, Osaic extended its reach in Knoxville with a former TrustFirst team, while Raymond James scored another win in the war for Commonwealth advisors.

RIA moves: Wealthspire snaps up $380M Marin Financial Advisors
RIA moves: Wealthspire snaps up $380M Marin Financial Advisors

Meanwhile, EP Wealth extended its Southwestern presence with a $370 million women-led firm in Santa Fe, New Mexico.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.