Charles Schwab Launches Commission Free ETF Trading

Charles Schwab, one of the largest US brokerages announced the launch of Schwab ETF OneSource™ — a new ETF platform that gives investors and advisors access to the most commission-free ETFs anywhere in the industry.

Schwab clients can buy and sell 105 ETFs with $0 online trade commissions. The offering spans major asset classes, with funds from leading providers, including State Street SPDR® ETFs, Guggenheim Investments, PowerShares, ETF Securities, United States Commodity Funds, and Charles Schwab Investment Management.

“Just as Schwab Mutual Fund OneSource™ changed the landscape for investors and advisors by providing convenient, affordable access to leading mutual funds when Chuck Schwab introduced it twenty years ago, we believe Schwab ETF OneSource will deliver enormous benefit and change the way our clients buy and sell ETFs,” said Walt Bettinger, CEO of Charles Schwab.

Bettinger emphasized that Schwab clients who buy ETFs online through Schwab ETF OneSource will pay exactly the same operating expense ratios (OERs) they would elsewhere, but without paying a commission.

No Commissions, More Control.

“Today’s investors, and the advisors who serve them, want sophisticated, low-cost strategies and more control over their investment choices and outcomes,” said Bettinger. “By working with these leading ETF managers to offer the largest selection, we’ve created a new home for clients to buy and sell ETFs that is an important complement to the tools and resources we offer to help them achieve their goals.”

He elaborated, “Awareness and popularity of ETFs have been growing steadily across the range of investors and advisors. Whether there is interest in broad-based exposure to equity markets, access to a single asset class, or a specific fund that seeks to reduce Volatility – Schwab ETF OneSource offers a solution – and we’re helping investors put more of their money to work for them. It’s another example of Schwab challenging the status quo to bring greater value to our clients.”

Cost Matters

According to the 2012 ETF Investor Study by Charles Schwab, released in October of last year, cost is the number one factor investors look at when selecting ETFs. Investors surveyed said they pay the most attention to OERs, followed by trade commissions. Nearly forty percent say the ability to trade ETFs commission-free is either ‘most important’ or ‘very important.’

The same study revealed that investor usage of ETFs is going strong, with 41 percent planning to invest more in ETFs this year. At the same time, there is a distinct need for investor education, with 45 percent calling themselves novices when it comes to understanding ETFs.

Assets in ETFs stand at $1.4 trillion as investors continue to embrace the diversification, low cost, trading flexibility and transparency that ETFs tend to offer.

“Our goal is to make ETF investing accessible, affordable and understandable,” said Peter Crawford, senior vice president of Charles Schwab. “So while Schwab ETF OneSource offers a highly compelling pricing story, this is not about cost alone. Side-by-side with affordability, we also provide the guidance and educational resources to help investors and advisors select the right ETFs to meet their needs.”

New Portfolio-Building Tool

Crawford cited today’s debut of the Schwab ETF Portfolio Builder™ as notable for self-directed clients who want to create all-ETF portfolios that meet their chosen risk profiles. Constructed from standard risk profiles and featuring eight commission-free ETFs at launch (from Charles Schwab Investment Management as well as others), this new tool makes it simple and affordable to build a well-diversified portfolio. Clients choose a risk profile and can adjust the number of shares for each ETF while viewing the impact on their portfolio, and purchase the portfolio online.

The Schwab ETF Portfolio Builder rounds out Schwab’s robust set of tools and resources, which includes:

The recently launched ETF Education Exchange™, another example of industry partnership, where investors have comprehensive access to the latest insights and intelligence from industry-wide ETF thought leaders;

The “ETF Research” tab on Schwab.com, where investors can access interactive tutorials and education in the “Understanding ETFs” tab to learn how ETFs work, and search for ETFs based on a wide range of criteria using the ETF Screener; and

ETF Select List™, where investors can find high-quality, low-cost ETFs screened by Schwab experts to help fill a gap or develop diversified portfolios.

Currency ETF's have become popular amongst investors as currency pairs have low correlation factor, Forex Magnates team wrote a detailed report on the growing FX Funds market, available in the Q3 quarterly report 2012.