Charles Schwab, the online brokerage firm that also markets a
15-ETF-fund lineup of the lowest-cost
in the United States, today launched a broad free-ETF trading
program that involves 90 non-Schwab ETFs as well as its own 15
funds, in what appears to be the most enticing-if not most
ambitious-program of its kind to date.
Schwab ETF OneSource is designed around the core investment
exposure the 15 Schwab ETFs provide, but makes use of funds from
five other providers-including State Street Global Advisors,
Guggenheim, PowerShares, ETF Securities and United States
Commodity Funds-to fill in any asset allocation gaps, the company
said today in a press release. Terms of their participation
"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," Schwab
Chief Executive Officer Walt Bettinger said in the press
The move to eliminate trading commissions on ETF trading began
with Schwab itself in November 2009, when it rolled out the first
of its funds, and quickly snowballed across the industry. First
Fidelity stepped in, offering a number of iShares ETFs free
of charge, andVanguard did the same as Schwab with its own lineup
Schwab's 105-fund program is similar to one involving more
than 100 funds launched by TD Ameritrade in October 2010,
with one crucial difference. While investors in both cases pay
the same expense ratios as they would elsewhere, and don't pay
commissions, TD Ameritrade investors get hit with a short-term
trading fee if they buy and sell a fund within 30 days. Not so at
Funds In The Program
Schwab appears to have shrewdly chosen funds, as many are
marquee names in the ETF industry that have garnered considerable
investor interest in the past few years.
Some of the funds from the different providers and their
assets under management are:
- SPDR Barclays Convertible Securities ETF (NYSEArca:CWB), $1
- Guggenheim S&P 500 Equal Weight ETF (NYSEArca:RSP),
- Guggenheim BulletShares Corporate Bond ETFs
(NYSEArca:BSCC)-one fund of two families of fixed-income funds
that close when the portfolio holdings mature
- PowerShares S&P 500 Low Volatility Portfolio
(NYSEArca:SPLV), $3.33 billion
- ETF Physical Swiss Gold Shares (NYSEArca:SGOL), $1.92
- United States Commodity Index Fund (NYSEArca:USCI), $522
"Because USCI is a retail and RIA product, we think being on
the Schwab platform will obviously get it a lot more exposure,"
John Hyland, the chief investment officer of United States
Commodity Funds said in a telephone interview, making plain what
all the involved fund sponsors must be thinking about now given
Schwab's considerable distribution might.
"We are pleased that all four funds are there-we're extra
pleased about USCI," he said.
Hyland's company is one of the main purveyors of futures-based
ETFs. Apart from USCI, Schwab chose three other funds from
Hyland's firm, the United States 12 Month Oil Fund
(NYSEArca:USL), the United States 12 Month Natural Gas Fund
(NYSEArca:UNL) and the United States Gasoline Fund
Schwab published a full list of the funds involved in the
program on an ETF OneSource sitelet on its website.
San Francisco-based Schwab today also unveiled Schwab ETF
Portfolio Builder, a tool for do-it-yourself investors to help
them formulate systematic asset-allocation plans.
Clients choose a risk profile and can adjust the number of
shares for each ETF while viewing the impact on their portfolio,
and purchase the portfolio online.
The portfolio comes with up to eight commission-free ETFs at
launch, Schwab said.
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