Schwab Asset Management has launched its second active fixed income ETF, the Schwab Core Bond ETF (SCCR). This marks a significant step in Schwab’s expansion into the actively managed bond ETF space, following the success of its first offering, the Schwab Ultra-Short Income ETF (SCUS ), which debuted last year.
This new ETF carries an expense ratio of 0.16%. It offers a cost-efficient way to gain exposure to a broad range of U.S.-dollar-denominated debt securities. These include corporate bonds, taxable municipal bonds, mortgage pass-through securities, commercial mortgage-backed securities, asset-backed securities, U.S. Treasuries, and other government-related bonds.
The fixed income ETF’s strategy draws on the expertise of the Wasmer Schroeder team. That team has managed a similar portfolio as a separately managed account.
Greater Flexibility
According to David Lafferty, director of product management & innovation at Schwab Asset Management, "The Schwab Core Bond ETF provides investors with access to our portfolio management team’s expertise, along with the inherent features of an ETF. In today’s rate environment, investors have the potential to capture a healthy level of income and navigate total market volatility by diversifying their core bond exposure with high-quality bonds.”
The launch of SCCR comes at a time when demand for active management strategies in fixed income investments is growing. Investors are increasingly seeking ways to balance income generation with protection from interest rate and market volatility. Active management in fixed income allows for greater flexibility in adjusting to changing economic conditions. It offers an advantage over passive strategies during periods of uncertainty.
See More: Why It’s Time to Go Active for Your Core Bond Allocation
“Schwab’s prudent approach to product launches has helped it create legacy ETFs that stand the test of time,” said Kirsten Chang, senior industry analyst at VettaFi. “It’s exciting to see them continue to build out their active fixed income franchise while maintaining a reputation of lower costs. In today’s uncertain rate environment, advisors are always on the lookout for sharper tools to help them diversify their clients’ bond exposure.”
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