Schwab ETFs, Money-Market Funds Drew Big Haul in 3Q
Charles Schwab Corp. customers poured money into exchange-traded funds in the third quarter, while they pulled cash out of mutual funds, excluding money-market funds, which racked up the most inflows of all.
As of the end of the last quarter, Schwab had $1.6 trillion in ETF assets, a category that includes all assets in Schwab’s proprietary ETFs as well as those in third-party funds held in Schwab accounts. That figure is up 24% year-over-year, driven by the 20% rise in the market based on the benchmark SPDR S&P 500 ETF Trust (SPY).
Schwab investors added $31 billion into ETFs in the third quarter and pulled $16 billion out of traditional mutual funds, excluding money-market funds. Mutual fund outflows were about half the $31 billion in the third quarter of last year, while ETF inflows dropped 13% from $36 billion from the third quarter a year ago. Both outflows and inflows stayed steady from the second quarter of 2023.
Out of Schwab’s largest proprietary ETFs, the big winners in terms of inflows were the $47 billion Schwab U.S. Dividend Equity ETF (SCHD) and the $31 billion Schwab Schwab International ETF (SCHF). SCHD took in more than $1.2 billion in the third quarter, while SCHF gained $582 million.
Schwab ETFs Inflows
ETFs held by Schwab investors have racked up $96 billion in inflows this year through the end of September, while money-market funds received $143 billion during that period. Inflows into the money-market funds includes $38 billion in the third quarter, $30 billion in the second quarter and $75 billion in the first quarter.
Money-market funds tend to gain assets when investors are fearful, and so they head to safe assets. The Cboe Volatility Index, or VIX, is nicknamed “the fear index” and is seen as a proxy for investor sentiment.
VIX hit highs of over 26 at the end of the first quarter with the regional banking crisis, and it ended the second quarter at 14, before ticking back up to over 17 by the end of the third quarter.
Contact Gabe Alpert at gabriel.alpert@etf.com
