1. Charles Schwab - lowest fee index fund in the US with a a fee of 0.03%
2. Vanguard charges about 0.4-0.5%
3. Total ETF market in the US - $2.5trillion
4. Top players
Blackroack - $950 billion
Vanguard - $450 billion
State Steet - $200 billion
Invesco - $100 billion
5. Charles Schwab grew its ETF funds from almost 0 in 2009 to $50 billion now. Most of its ETF customers are its existing customers. Only 30% are new customers.
Charles Schwab has 10 million brokerage customers, 1.6 million retirement accounts and 7,000 financial advisers use it for trading and other back office services.
6. In 2015 the company launched a robo-adviser, a web-based service that automatically builds clients a diversified portfolio; the service invests mainly through Schwab’s ETFs.
7. No Niche Index Products - Schwab launched its ETFs in 2009, relatively late. Other newer entrants have chosen to bypass basic index funds to offer more novel strategies. For example, one ETF tracks companies that supposedly fight obesity, and another holds video-game makers. Except for a real estate fund, Schwab has no industry-specific ETFs. “Cost is the holy grail for the future of this industry,” says Marie Chandoha, head of Schwab’s asset management subsidiary. “We are not focused on niche products.”
8. Other Niche Index Funds - Another popular strategy, called smart beta, is to build specialized indexes that weight stocks based on factors such as low valuation or dividends in an attempt to beat the market. No. 4 player Invesco has heavily embraced smart beta with its PowerShares funds. Schwab has a few such offerings, too, dubbed Fundamental Index funds, but so far they represent only 10 percent of its ETF assets. Smart beta charges more than the basic index funds—Schwab’s cost 32¢ or more per $100 invested.
9. Scaling Up - “Schwab will continue to pull in assets, but I don’t think you are going to see them reach a couple of hundred billion dollars overnight,” says Dave Nadig, director of ETFs at FactSet. The captive-audience model has its limits. “It’s a bit difficult to imagine Vanguard brokerage customers buying Schwab ETFs,” says Nadig.
10. Competition driving fees even further down - And the price war is getting more intense. Goldman Sachs in 2015 launched a line of smart-beta ETFs with expenses of just 9¢ per $100 invested. That’s far cheaper than Schwab’s smart-beta offerings. On Oct. 5, BlackRock announced it would cut expenses on 15 stock-and-bond ETFs, matching Schwab in a number of fund categories.
http://www.bloomberg.com/news/articles/2016-10-06/schwab-s-etfs-are-gobbling-up-a-2-4-trillion-market
2. Vanguard charges about 0.4-0.5%
3. Total ETF market in the US - $2.5trillion
4. Top players
Blackroack - $950 billion
Vanguard - $450 billion
State Steet - $200 billion
Invesco - $100 billion
5. Charles Schwab grew its ETF funds from almost 0 in 2009 to $50 billion now. Most of its ETF customers are its existing customers. Only 30% are new customers.
Charles Schwab has 10 million brokerage customers, 1.6 million retirement accounts and 7,000 financial advisers use it for trading and other back office services.
6. In 2015 the company launched a robo-adviser, a web-based service that automatically builds clients a diversified portfolio; the service invests mainly through Schwab’s ETFs.
7. No Niche Index Products - Schwab launched its ETFs in 2009, relatively late. Other newer entrants have chosen to bypass basic index funds to offer more novel strategies. For example, one ETF tracks companies that supposedly fight obesity, and another holds video-game makers. Except for a real estate fund, Schwab has no industry-specific ETFs. “Cost is the holy grail for the future of this industry,” says Marie Chandoha, head of Schwab’s asset management subsidiary. “We are not focused on niche products.”
8. Other Niche Index Funds - Another popular strategy, called smart beta, is to build specialized indexes that weight stocks based on factors such as low valuation or dividends in an attempt to beat the market. No. 4 player Invesco has heavily embraced smart beta with its PowerShares funds. Schwab has a few such offerings, too, dubbed Fundamental Index funds, but so far they represent only 10 percent of its ETF assets. Smart beta charges more than the basic index funds—Schwab’s cost 32¢ or more per $100 invested.
9. Scaling Up - “Schwab will continue to pull in assets, but I don’t think you are going to see them reach a couple of hundred billion dollars overnight,” says Dave Nadig, director of ETFs at FactSet. The captive-audience model has its limits. “It’s a bit difficult to imagine Vanguard brokerage customers buying Schwab ETFs,” says Nadig.
10. Competition driving fees even further down - And the price war is getting more intense. Goldman Sachs in 2015 launched a line of smart-beta ETFs with expenses of just 9¢ per $100 invested. That’s far cheaper than Schwab’s smart-beta offerings. On Oct. 5, BlackRock announced it would cut expenses on 15 stock-and-bond ETFs, matching Schwab in a number of fund categories.
http://www.bloomberg.com/news/articles/2016-10-06/schwab-s-etfs-are-gobbling-up-a-2-4-trillion-market
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