Charles Schwab trims fees on $40bn worth of fixed income ETFs | ETF Strategy



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Schwab Asset Management has shaved the fees charged on seven core fixed income ETFs providing aggregate, US Treasury, inflation-protected, and corporate bond exposures.

Charles Schwab trims fees on $40bn worth of fixed income ETFs

Investors in the ETFs will save approximately $4m per year in annual management fees at current AUM levels.

While each ETF has had its expense ratio lowered by just one basis point, the funds in question are relatively substantial in terms of assets under management.

The ETFs benefiting from reduced fees range in size from $90 million to $15.6 billion in assets under management. Collectively, they house $39.6bn.

Following the fee cuts, investors in the ETFs stand to save approximately $4m per year in annual management fees at current AUM levels.

Despite core portfolio ETFs already charging near-rock-bottom fees, competition remains fierce amongst low-cost ETF providers. Schwab, which has been engaged in a fee war with BlackRock and Vanguard, last announced a series of expense ratio reductions less than six months ago including on many products that are being further lowered now.

However, with bond yields remaining below their historical averages, tiny differences in expense ratios continue to make significant impacts on performance.

Three of the seven ETFs target different segments of the US Treasury yield curve – they are the $8.7bn Schwab Short-Term US Treasury ETF (SCHO US), the $7.0bn Schwab Intermediate-Term US Treasury ETF (SCHR US), and the $90m Schwab Long-Term US Treasury ETF (SCHQ US).

Two ETFs focus on USD-denominated investment-grade corporate bonds, also with specific remaining maturities – they are the $360m Schwab 1-5 Year Corporate Bond ETF (SCHJ US) and the $390m Schwab 5-10 Year Corporate Bond ETF (SCHI US).

Each of these five ETFs is now priced at just 0.03%, one basis point cheaper than similar funds offered by Vanguard.

The $7.5bn Schwab US Aggregate Bond ETF (SCHZ US), meanwhile, has also seen its expense ratio trimmed to 0.03%, matching the price tag of the $80.9bn iShares Core US Aggregate Bond ETF (AGG US).

Finally, the $15.6bn Schwab US TIPS ETF (SCHP US) has had its fee cut by one basis point from 0.05% to 0.04%, putting it on par with the $21.1bn Vanguard Short-Term Inflation-Protected Securities ETF (VTIP US).

The seven funds are listed below alongside their AUM and new expense ratios

Schwab Short-Term US Treasury ETF (SCHO US); $8.7bn; 0.03%
Schwab Intermediate-Term US Treasury ETF (SCHR US); $7.0bn; 0.03%
Schwab Long-Term US Treasury ETF (SCHQ US); $90m; 0.03%
Schwab 1-5 Year Corporate Bond ETF (SCHJ US); $360m; 0.03%
Schwab 5-10 Year Corporate Bond ETF (SCHI US); $390m; 0.03%
Schwab US Aggregate Bond ETF (SCHZ US); $7.5bn; 0.03%
Schwab US TIPS ETF (SCHP US); $15.6bn; 0.04%



Read More: Charles Schwab trims fees on $40bn worth of fixed income ETFs | ETF Strategy

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