Schwab latest to hop on active-ETF bandwagon

Schwab latest to hop on active-ETF bandwagon
Add the online broker to the growing list of firms queuing up to offer actively managed ETFs
APR 17, 2012
Charles Schwab & Co. Inc. has thrown its hat into the increasingly crowded actively managed ETF ring. The discount brokerage has filed with the Securities and Exchange Commission to offer a wide range of actively managed exchange-traded funds. Schwab is seeking the ability to launch domestic and international equity or fixed-income active ETFs and ETFs of ETFs, according to its filing. It did not offer details on any specific products or strategies. Active ETFs have been increasingly popular in headlines — if not assets — over the past few weeks, thanks to the launch of the highly anticipated Pimco Total Return ETF Ticker:(TRXT), an offshoot of the largest mutual fund in the world. In general, investors have been slow to embrace active ETFs. At the end of last year, 33 active ETFs were available, with a total of $4.2 billion in assets. That's barely a drop in the bucket for the overall ETF industry, which has $1 trillion in assets under management. While active ETFs haven't been very popular, the active management of ETFs is a different story. Morningstar Inc. tracked more than 330 model portfolios that had more than 50% of assets invested in ETFs as of last year. Those portfolios had $22 billion in assets. Schwab burst onto the ETF scene in November of 2009 when it launched its first lineup of passive ETFs and became the first brokerage to allow investors to trade ETFs commission-free. The Schwab ETFs have grown to about $7 billion in assets since then, according to Morningstar. And Schwab made a sizable investment in the active management of ETFs in November 2010 when it purchased Windhaven Investment Management Inc., a registered investment adviser that specializes in ETF portfolios. Alyson Nikulicz, a spokeswoman for Schwab, declined to comment.

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