Charles Schwab has expanded its line of low cost ETFs from four to six, adding the Schwab U.S. Large-Cap Growth ETF (SCHG) and Schwab U.S. Large-Cap Value ETF (SCHV) to its lineup on Friday. Similar to the four funds launched in November, these large cap ETFs can be bought and sold commission free online in Schwab accounts. Schwab’s initial four funds had included a large cap (SCHX), broad market (SCHB), small cap (SCHA), and international equity (SCHF) ETFs.
“Individual investors and investment advisors count on Schwab for products which provide exceptional value, and our clients have indicated an interest in ETFs as a way to invest in and trade entire segments of the market,” said Peter Crawford, senior vice president at Charles Schwab & Co., Inc. “These two new ETFs allow investors to tilt their portfolios based on whichever style, growth or value, they think will lead the market in the future.”
Early Success
| Large Cap Growth ETFs | ||
|---|---|---|
| ETF | Issuer | Expense |
| SCHG | Schwab | 0.15% |
| VUG | Vanguard | 0.15% |
| IVW | iShares | 0.18% |
| ELG | SPDR | 0.20% |
After about a month of trading, Schwab’s first four ETFs have accumulated more than $200 million in assets, and average daily trading across the funds has exceeded 500,000 shares, impressive totals for new products. In addition to commission-free trading in Schwab accounts, the company’s ETFs are among the most cost-efficient in the industry, coming in with lower expense ratios than even many Vanguard products. SCHV and SCHG are no different, matching the 0.15% expense ratios offered by Vanguard for large cap value and large cap growth ETFs, respectively.
As the ETF industry continues to develop, there are clear signs that investors are beginning to focus on costs when choosing between otherwise similar funds. Vanguard, the issuer that generally offers the lowest expenses, saw more than $5.4 billion in cash inflows in November, besting all other competitors. The Vanguard Emerging Markets ETF, which charges 0.27%, has taken in $7.7 billion this year, well more than the $4.0 to an iShares fund that tracks the same index but charges a whopping 0.72% (see Five Ways To Slash Your ETF Expenses for a look at four more trades that can translate into big savings). Now Schwab’s early success is further evidence that expense ratios matter to investors, potentially setting the stage for a series of price wars in 2010.
Next Up
Schwab is planning two additional ETF launches in the next month or so, expecting to launch the Schwab International Small-Cap Equity ETF (SCHC) and Schwab Emerging Markets Equity ETF (SCHE) in January 2010. To stay caught up on all the new ETF launches, sign up for our free ETF newsletter or visit the new ETFs archive.
Disclosure: No positions at time of writing.
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