News
Schwab Plans US Small-Cap Style, Payout ETFs
July 26, 2011
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Charles Schwab, the San Francisco-based discount broker that began rolling out its own ETFs in late 2009, filed new paperwork with the Securities and Exchange Commission outlining plans to bring three U.S. ETFs to market, two focused on small-cap "value" and "growth" companies and the third on firms that have reliable dividends. The three new planned ETFs and their proposed trading symbols
The style-based small-cap ETFs will complement the company’s existing Schwab U.S. Small-Cap ETF (NYSEArca: SCHA), which has gathered more than $540 million in assets since its rollout on Nov. 3, 2009. The benchmarks the two new ETFs will use are subsets of the Dow Jones U.S. Small Cap Total Stock Market Index on which SCHA is based. The dividend-focused ETF, which will choose companies that consistently pay dividends and have strong "financial ratios" relative to their peers, is based on the Dow Jones U.S. Dividend 100 Index. That benchmark is a subset, excluding REITs, of the Dow Jones U.S. Broad Market Index, the filing said. That’s the same index behind the Schwab U.S. Broad Market ETF (NYSEArca: SCHB), which has gathered almost $800 million since its November 2009 launch. Schwab has slowly and steadily gathered assets since it began rolling out its own ETFs less than two years ago. It had $4.66 billion in proprietary ETF assets as of July 25, according to data compiled by IndexUniverse. Company officials have said Schwab will compete on price, and argue that that’s an important variable because its funds trade efficiently with tight bid/ask spreads and track their indexes closely. To date, Schwab has launched 14 ETFs, including seven focused on U.S. equities, three on international equities—including the Schwab Emerging Markets ETF (NYSEArca: SCHE), and four targeting the U.S. fixed-income universe. Its most recent launch, the Schwab Aggregate Bond ETF (NYSEArca: SCHZ), has gathered almost $70 million since its rollout less than two weeks ago. Schwab didn’t specify possible expense ratios for the three new ETFs it put into registration on July 25.
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