In an effort to leverage the growing $1.4 trillion ETF market, Charles Schwab announced Thursday it launched Schwab ETF OneSource, a basket of 105 commission-free exchange-traded funds.
The new offering adds to Schwab’s $152 billion ETF platform, and includes major asset classes with funds from providers including State Street SPDR ETFs, Guggenheim Investments, and Charles Schwab Investment Management.
“Today’s investors, and the advisors who serve them, want sophisticated, low-cost strategies and more control over their investment choices and outcomes,” Walt Bettinger, CEO of Charles Schwab, said in a statement. “By working with these leading ETF managers to offer the largest selection, we’ve created a new home for clients to buy and sell ETFs that is an important complement to the tools and resources we offer to help them achieve their goals.”
Uncertainty in global markets coupled with a lack of active managers that consistently achieve alpha – excess return of a mutual fund in relation to a benchmark index – have continued to fuel investors’ appetite for the diversification, low cost, trading flexibility and transparency that ETFs tend to offer.
Assets flowing into ETFs are forecast to continue growing, with institutional investors broadening their ETF applications in 2013, according to predictions by BlackRock's iShares group.
“Awareness and popularity of ETFs have been growing steadily across the range of investors and advisors,” said Bettinger. “Whether there is interest in broad-based exposure to equity markets, access to a single asset class, or a specific fund that seeks to reduce volatility – Schwab ETF OneSource offers a solution – and we’re helping investors put more of their money to work for them.”
Clients who buy ETFs online through Schwab ETF OneSource will pay exactly the same operating expense ratios they would elsewhere, but without paying a commission, Bettinger said. While there is no online commission fee, clients will still have to pay an exchange processing fee to sell transactions, and management fees and expenses.
As a complement to Schwab’s new platform, the firm also introduced a new portfolio-building tool, Schwab ETF Portfolio Builder, which allows clients to select a certain risk profile and control the number of shares for each ETF. The tool also gives clients access to educational resources to ETFs, as well as industry insights from thought leaders.
“Side-by-side with affordability, we also provide the guidance and educational resources to help investors and advisors select the right ETFs to meet their needs,” said Peter Crawford, senior vice president of Charles Schwab. “Our goal is to make ETF investing accessible, affordable and understandable.”