Schwab Responds to BlackRock’s Latest ETF Price War Salvo

Markets ETF Trends

Not to be outdone, Charles Schwab lowered fees on five exchange traded funds to solidify its low-cost leadership in response to BlackRock’s latest expense ratio cuts.

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On Friday, Charles Schwab cut the expense ratio on five of its ETFs by 1 basis point, including:

  • Schwab U.S. Small-Cap ETF (NYSEArca: SCHA): new 0.06% expense ratio.
  • Schwab U.S. Mid-Cap ETF (NYSEArca: SCHM): new 0.06% expense ratio.
  • Schwab International Equity ETF (NYSEArca: SCHF): new 0.07% expense ratio.
  • Schwab Emerging Markets Equity ETF (NYSEArca: SCHE): new 0.13% expense ratio.
  • Schwab U.S. Aggregate Bond ETF (NYSEArca: SCHZ): new 0.04% expense ratio.

“The appeal of index investing continues to accelerate,” Marie Chandoha, President and CEO of CSIM, said in a note. “When individuals invest their hard-earned money, they are increasingly searching for low-cost, transparent, enduring products. It’s our mission to deliver on that, and we are proud that CSIM has been the catalyst for helping investors access lower cost ETFs across the industry.”

The fee cuts are seen as a response to BlackRock’s recent cost reductions on 15 of its iShares “Core” ETF suite.

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SEE MORE: BlackRock’s ETF Fee Cuts ‘Out Vanguard’ Vanguard

“While the iShares news this week appeared to be focused on competing with Vanguard, the second largest ETF provider, Schwab has gained market share in the past couple of years in part by being a low-cost provider of market-cap weighted equity and fixed income ETFs. We expect Schwab’s ETF business to continue to grow in the fourth quarter and in 2017, in part because of its strong lineup and its widely used brokerage platform,” Todd Rosenbluth, S&P Global Market Intelligence Director of ETF Research, said in a note.

SEE MORE: ETF Industry Edges Toward Free Core Products

Schwab currently offers the cheapest U.S.-listed ETFs on the market, including the Schwab U.S. Large-Cap ETF (NYSEArca: SCHX) and Schwab U.S. Broad Market ETF (NYSEArca: SCHB), which both come with a 0.03% expense ratio.

Charles Schwab has also been growing its ETF business through commission-free ETF trades on its ETF OneSource platform, which provides free trades on over 200 ETFs from 16 fund providers, including Schwab’s own suite of ETFs.

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This article was provided by our partners at ETFTrends.