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Schwab Sees Significant Third-Quarter ETF Growth


Charles Schwab (SCHW) is seeing more of its clients warm to exchange traded funds as investors are embracing equity funds while departing some bond and commodity plays.

At the end of the third quarter, ETF assets custodied at Schwab reached $179 billion, up 22% on a year-over-year basis, a clip that is enough to outpace industry growth of 19%, Schwab said in its third-quarter Investor Snapshot released Wednesday.

Retail Traders captured 6% of the 12-month ETF Flows, while retail investors and RIA Clients split the remaining 94%. U.S. and International Equity ETFs represented almost 90% of the ETF flows in Q3, a consistent trend across all client segments, according to Schwab data.

Schwab’s reputation as one of the low-cost leaders in the ETF industry could be one reason for the significant jump in ETF assets now custodied at the firm. Last week,  the company added 16 new ETFs including five from Guggenheim, five from SPDR ETFs and six from Charles Schwab Investment Management, to its Schwab ETF OneSource platform of commission-free ETF offerings. [Schwab Adds Commission-Free ETFs to OneSource Lineup]

OneSource now features 121 ETFs on a commission-free basis. In addition to funds from the aforementioned issuers, Schwab ETF OneSource features ETFs from PowerShares, the fourth-largest U.S. ETF sponsor, ETF Securities and U.S. Commodity Funds. [Schwab Unveils Game-Changing ETF Platform]

For the trailing 12-month period, Schwab said its clients pulled capital from long-duration and high-yield bond ETFs, but bank loan and short-duration funds saw inflows. Not surprisingly, Schwab clients pulled money from gold ETFs, but flows to silver funds were steady. [Silver ETFs Could Shine for Long-Term Investors]

In terms of equities, about 3/4 of the U.S. Equity flows went into Large Cap ETFs, which have experienced considerable growth over the last year, said Schwab. Flows to global funds were dominated by Europe and Japan funds, “which together represented nearly half of the International flows.”

At the sector levels, Schwab clients embraced financial services, health care and mining ETFs. The firm said all sectors saw positive flows for the 12-month period ending Sept. 30.

Popular Schwab ETFs include the Schwab U.S. Large-Cap ETF (SCHX) and the Schwab US Dividend Equity ETF (SCHD) .

Schwab Flows Data (charts courtesy of Charles Schwab)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.