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One of the world’s biggest financial services firms has decided to throw its hat into the ETF marketplace. On Jan. 30, Charles Schwab & Co. (NASDAQ: SCHW) filed with the Securities and Exchange Commission for exemptive relief that would allow it to create ETFs. The fund described in the filing would track the Dow Jones U.S. Total Stock Market Index, which according to the filing, covers all publicly traded U.S. stocks with readily available pricing information. The Schwab filing makes reference to other possible index-tracking ETFs, but only specifically names the one fund. With more than $1 trillion in client assets and a market capitalization of $18 billion, Schwab certainly has the resources and assets to become an instant 800-pound gorilla in the field. Although a Schwab spokesperson initially confirmed that it was moving forward with plans to enter the ETF marketplace, the firm declined to issue further comments until regulators have ruled on the exemptive relief request. The discount brokerage and asset manager’s operations include investment research, mutual funds and retail banking, among other services. With its low-cost brokerage operations and its mutual fund operations, which include several index funds, ETFs seem to be a logical next step. Its greatest advantage might be the fact that it has the financial capability to nurture new ETFs through those critical first years, when they might not be significant money makers.
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