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ETF Assets Continue Flowing to Charles Schwab


Last year was another banner year of inflows to U.S.-listed exchange traded products as the U.S. ETF industry surpassed the $2 trillion in assets milestone. For the year, U.S. ETFs and ETNs hauled in a record $245.7 billion of new asset.

Charles Schwab (SCHW), the largest discount broker, continues grabbing its fair share of ETF assets. For the year, ETF assets custodied at Schwab surged 18% to $231 billion, according to the firm’s fourth-quarter and 2014 snapshot released this week.

“ETF Flows at Schwab were $24.5B, up 7% over 2013. RIA Clients captured half of the 12-month ETF Flows, up from 2013, while Retail Traders and Retail Investors represented the other half ,” according to California-based Schwab.

Schwab issues 21 of its own ETFs, including four fixed income funds and six international equity funds. In 2014, investors allocated record assets to bond ETFs. The Schwab U.S. Aggregate Bond ETF (SCHZ) , which charges just 0.06% per year, has $1.2 billion in assets under management. [Low-Fee Bond ETFs]

Schwab noted that registered investment advisors (RIAs) drove a substantial portion of the inflows to corporate bond and intermediate-term bond ETFs.

Another prominent theme is investors’ increased use of sector and dividend ETFs. As of Dec. 26, there was $311.1 billion allocated to sector ETFs with energy ETFs accounting for $44.7 billion of that total, according to Bloomberg.

“There was a shift back to Sector ETFs, which represented 19% of flows, versus 7% in 2013. Real Estate was back in favor, accounting for nearly half of the Sector flows. Flows into all Sector categories were positive, except for Consumer Cyclical,” according to Schwab.

“According to S&P Dow Jones Indices, 971 dividend increases were reported during the fourth quarter of 2014 compared to the 885 increases which were reported during the fourth quarter of 2013. For all of 2014, 3308 issues increased their payments, up 14.3% from the 2895 issues that increased their payments during 2013,” said S&P in a note earlier this month.

The Schwab US Dividend Equity ETF (SCHD) is now home to $2.7 billion in assets under management, up from $2.1 billion in early October. SCHD tracks the Dow Jones U.S. Dividend 100 Index, which not only features some of the largest U.S. dividend payers, but also only those companies with at least 10 years of increased payouts. [Quality Fuels This Dividend ETF]

In September, Schwab unveiled a massive expansion of its Schwab ETF OneSource commission-free ETF platform by adding 65 new ETFs and seven new issuers.

New providers joining OneSource are ALPS, Direxion Investments, Global X Funds, IndexIQ, PIMCO, ProShares and WisdomTree (WETF). Those firms join OneSource’s original members State Street (STT), Guggenheim, Invesco’s (IVZ) PowerShares, ETF Securities, U.S. Commodity Funds and Schwab’s own lineup of ETFs. [Schwab Bolsters Commission-Free ETF Lineup]


Charts Courtesy: Charles Schwab

Tom Lydon’s clients own shares of SCHD.