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The long-anticipated move by giant discount broker and asset manager Charles Schwab Corp. into the exchange-traded funds market is taking shape.
In a series of new filings with the Securities and Exchange Commission, San Francisco-based Schwab (Nasdaq: SCHW) gave its first concrete details of plans with ETFs.
The company has turned over a prospectus dated July 15 to regulators for a complete family of nine initial ETFs. Along with related filings that showed up on the SEC site on Thursday afternoon, the new Schwab ETFs covering domestic stock markets would include the:
- Schwab U.S. Broad Markets ETF
- Schwab U.S. Large-Cap ETF
- Schwab U.S. Large-Cap Value ETF
- Schwab U.S. Large-Cap Growth ETF
- Schwab U.S. Small-Cap ETF
In foreign markets, the firm's lineup is planned to include the:
- Schwab International Equity ETF
- Schwab International Small-Cap Equity ETF
- Schwab Emerging Markets Equity ETF
No expenses were detailed in the filings. The international funds will follow FTSE Group indexes.
The Broad Markets ETF is likely the same as described in Schwab's original filing on Jan. 30 requesting exemptive relief to enter the market. At the time, it had only referred to a total stock market index fund based on the Dow Jones U.S. Total Stock Market Index. (See related story here.)
All of the above-listed ETFs face entrenched competition. But with a market cap of almost $20.5 billion, Schwab certainly has the resources to shift aggressively into the expanding ETF marketplace. Besides a host of active and passive open-end mutual funds, the discount broker runs the world's biggest third-party funds marketplace in the U.S.
And it has a long history of offering index funds. Earlier this year, it slashed prices on those offerings, undercutting Fidelity—which had moved to undercut market-leader Vanguard several years ago.
Last year, Schwab came out with its own set of fundamental index funds with lower cost structures than similar ETFs that tracked indexes developed by Rob Arnott's Research Affiliates shop. (See related story here.)
In separate news, Schwab reported second-quarter earnings on Thursday, saying that its net income slid by slightly more than 30% to $205 million from a year earlier. Shares fell more than 2.4% on the day.
You can read the prospectus for the Schwab international ETFs being proposed here. A prospectus of the U.S.-focused funds hadn't appeared on the SEC site late Thursday.
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