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Schwab Continues Torrid Pace of ETF Asset Growth


Charles Schwab (SCHW), the largest discount broker, continues to solidify itself as a major player in the exchange traded funds space as ETF assets custodied at Schwab surged to $246 billion in the first quarter, a 24% year-over-year increase.

Schwab’s registered investment advisor (RIA) clients accounted for 54% of the $10.7 billion in ETF assets that flowed to the firm in the first quarter, according to the firm’s latest ETF Investor Snapshot released last Friday. That $10.7 billion of first-quarter flows was more than double the $4.8 billion in ETF assets hauled in by Schwab in the first quarter of last year. [Schwab Keeps Gaining ETF Assets]

Schwab clients kept with a prominent theme in the first three months of the year: Heavy allocations to international equity ETFs. Those funds accounted 47% of the first-quarter ETF inflows to Schwab while U.S. equity and U.S. bond funds accounted for 22% and 14%, respectively, of ETF inflows to Schwab.

Led by the WisdomTree Europe Hedged Equity Fund (HEDJ) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF) , six of this year’s top 10 asset-gathering ETFs are international equity funds. Schwab’s own Schwab Emerging Markets Equity ETF (SCHE) has hauled in over $207 million in new assets this year while the Schwab International Equity ETF (SCHF) has added over $643 million in new assets.

In the first quarter, California-based Schwab expanded its Schwab ETF OneSource lineup of commission-free exchange traded funds to nearly 200 offerings. OneSource, the largest commission-free ETF platform on the market today, has been a significant driver of ETF asset growth for Schwab. The new additions to OneSource come courtesy of five of the platforms current providers, Direxion, PowerShares, ProShares, State Street and WisdomTree.[Schwab Bolsters OneSource Lineup]

Last month, Schwab entered the robo advisor fray with Schwab Intelligent Portfolios. Schwab Intelligent Portfolios is also the only automated advisory services that uses algorithms to provide sophisticated advice and automatically monitor and rebalance portfolios without charging any advisory fees, commissions or account services fees.

Schwab Intelligent Portfolios, which will be available to advisors in the second quarter, are ETF-based and offer investors exposure to up to 20 diversified asset classes including, stocks, bonds and real estate across U.S., international and emerging markets.

Other top asset-gathering ETFs from Schwab include the Schwab US Dividend Equity ETF (SCHD) and the Schwab U.S. Large-Cap Growth ETF (SCHG) , which have added over $245 million combined this year.


Charts Courtesy: Charles Schwab