The exchange-traded fund price-cutting wars are heating up, with Charles Schwab (SCHW) stepping up its game. After slashing the expense ratios of all 15 Schwab ETFs last year, the broker is marking the 20-year anniversary of exchange-traded funds by launching commission-free ETFs.
Schwab ETF OneSource is a new platform that enables investors to trade 105 exchange-traded funds without online trade commissions. The new product is comprised of ETFs from leading providers covering 54 Morningstar categories. The providers are State Street SPDR ETFs, PowerShares, Guggenheim Investments, ETF Securities, United States Commodity Funds and Charles Schwab.
“We heard from our clients, advisors and investors that commissions are hurdles to purchasing ETFs,” said Beth Flynn, Charles Schwab VP of ETF Platform Development. “Now, investors and advisors will no longer be hindered by the commission piece of investing in ETFs.”
Cost is the No. 1 issue when selecting ETFs, according to the 2012 ETF Investor Study by Schwab. The other top factors considered extremely important are reputation of provider and performance history. The report also shows the top three when evaluating ETF costs, which are the expense ratio, trade commission and discount and premium pricing, according to the survey.
Schwab also unveiled the ETF Portfolio Builder, which enables investors to create an ETF portfolio comprised of eight commission-free funds.
“The ETF Portfolio Builder is a simple and affordable way for investors to build a diversified portfolio,” said Flynn. “An individual sets up an account and is able to select the degree of risk and modify the number of shares. All ETFs selected can be purchased with one click.”
The ETF Portfolio Builder is modeled off the Schwab Mutual Fund Portfolio Builder, which gives investors the ability to allocate investments across a diversified portfolio comprised of four to five mutual funds.