Schwab files for first ETF launch in four years

Jul 19th, 2017 | By | Category: ETF and Index News

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Charles Schwab has filed a regulatory request with the Securities and Exchange Commission (SEC) to list its first ETF since 2013. The fund, named the Schwab 1000 Index ETF, will track an in-house index composed of the largest 1,000 US stocks by market cap putting the fund in direct competition with ETFs that track the Russell 1000 Index.

Schwab files for first ETF launch in 4 years

Schwab currently offers 21 ETFs with an average AUM of $3.4bn.

The largest of these is the iShares Russell 1000 ETF (NYSE Arca: IWB) which has $18.6 billion in assets under management (AUM) and a total expense ratio (TER) of 0.15%. The Schwab fund will also be competing against the $2.7bn Vanguard Russell 1000 Index (Nasdaq: VONE) (TER 0.12%) and the $150 million SPDR Russell 1000 ETF (NYSE Arca: ONEK) (TER 0.10%). The filing for the Schwab 1000 Index ETF did not contain guidance on its expected TER.

Schwab has a reputation for offering low cost investment solutions, but as the above funds illustrate, the cheapest fund does not always attract the most assets. However, Schwab has a very strong distribution network including its trading platform where customers can trade Schwab ETFs for free.

Schwab currently offers just 21 ETFs but has still ranks as the fifth largest issuer in the US by AUM, with average assets per ETF standing at an impressive $3.4bn. The largest Schwab ETF is the Schwab International Equity ETF (NYSE Arca: SCHF) which has AUM of $10.7bn and a TER of just 0.03%.

Schwab also already offers the $9.3bn Schwab US Large-Cap ETF (NYSE Arca: SCHX) which tracks the Dow Jones US Large-Cap Total Stock Market Index, giving exposure to the 750 largest US stocks. With a TER of just 0.03%, SCHX could provide a guide as to where Schwab might price its latest ETF.

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