Charles Schwab Grabs for ETF Market Share

ETF Trends

Charles Schwab has made a mark in the exchange traded fund industry as investors gain more interest in these tools. From free trades, low fees, 401(k)’s, and international and domestic offerings, Schwab is increasing its ETF footprint.

The online broker and ETF provider is a long-time advocate of low-fees.  [PIMCO, Schwab Hit $10 Billion in ETFs]

“In January, the company topped $2 trillion in total client assets for the first time ever, and as of February, it had seen a 13% jump in assets. Yet trading activity remains muted, with just a 1% year-over-year increase in daily average trades,” Dan Caplinger reported for The Motley Fool.

Schwab has made landmark moves by offering ETFs that cover large swaths of the broad market and offering them at a steep discount to investors. For instance, the Schwab U.S. Broad Market ETF (SCHB) costs .04%, compared to the Vanguard Total Stock Market ETF (VTI) which costs 0.07%. Plus, Schwab was the first manager to offer free ETF trades for in-house brokerages. [Price Comparison Shopping with ETFs]

The 401(k) market for ETFs is the next frontier for providers, and Charles Schwab has made sure to be one of the first to the game. Mutual funds currently dominate the 401(k) retirement industry, but ETFs have come into focus for this area of the market as investors become more fee-conscious. The multi trillion dollar industry is expected to be a lucrative area for ETF managers, and many are racing for market share. [Low Fees Support the Push for All-ETF Retirement Accounts]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

View Comments