NEW YORK – Charles Schwab has launched eight new exchange-traded funds that offer Schwab clients commission-free online trading in addition to low operating expense ratios.
Schwab will be launching the first four ETFs on Tuesday, with the second four to follow in December. The first four are the Schwab U.S. Broad Market ETF, the Schwab U.S. Large-Cap ETF, the Schwab U.S. Small-Cap ETF and the Schwab International Equity ETF. The broad market and large-cap ETFs will have operating expense ratios of 0.08%, while the small-cap and international equity ETFs will have operating expense ratios of 0.15%.
"These ETFs will make dollar-cost averaging possible for everyday customers," said Walter Bettinger, Schwab's president and CEO.
He said the new ETFs have some of the lowest operating expense ratios on the market and can be bought and sold without commissions in Schwab accounts if they are purchased online, regardless of the number of shares traded.
While the free commission applies only to online trades of the eight Schwab ETFs, there is no limit to the number of trades per day.
In December, Schwab will launch the second four ETFs. They are the Schwab U.S. Large-Cap Growth ETF, the Schwab U.S. Large-Cap Value ETF, the Schwab International Small-Cap Equity ETF and the Schwab Emerging Markets Equity ETF. The operating expense ratios for the growth and value ETFs will be 0.15%, while the operating expense ratios for the international small-cap and emerging markets ETFs will be 0.35%.
"In nearly every category, we are the leading ETF provider in price," said Peter Crawford, senior vice president of Schwab's Investment Management Services organization. He said Schwab is launching a broad-based, multi-channel media campaign to promote the new ETFs.
While some ETFs have been criticized for investing in esoteric categories, Crawford said half of all ETF assets are in the eight categories Schwab is launching.
"We are focusing our ETFs on categories that are in demand by our clients," he said. "These ETFs will accelerate the growth and appeal [of ETFs] to a broad range of investors: from registered investment advisors to individual investors."
Crawford said only 16% of Schwab's individual investors currently own ETFs, but 43% of advisers who custody with Schwab said they plan to increase their usage of ETFs in the next six months. "This makes them vehicles with tremendous potential for growth," he said. Schwab has approximately $1.36 trillion in client assets.