Schwab Drafts Plans For REIT ETF

By
September 24, 2010
Share:

Schwab appears to be gunning for Vanguard’s VNQ with plans for a REIT ETF of its own.

Charles Schwab, the San Francisco-based discount broker that began offering its own exchange-traded funds last November, today filed paperwork with the Securities and Exchange Commission to launch its first ETF to tap into the
U.S.
real estate market.

The Schwab U.S. REIT ETF will track the float-adjusted market-capitalization-weighted Dow Jones U.S. Select REIT index, and invest in real estate companies that own and operate commercial as well as residential properties across the country, the filing said.

Despite real estate’s rocky road in the past few years, REIT ETFs appear to be popular, as investors position themselves for a recovery in the sector. Schwab’s strategy would compete with low-cost provider Vanguard’s REIT ETF (NYSEArca: VNQ). VNQ has been around since 2004. It has a 0.13 percent expense ratio and $6 billion in assets.

Other, more costly, competitors include the SPDR Dow Jones REIT (NYSEArca: RWR) and the iShares Dow Jones U.S. Real Estate (NYSEArca: IYR), both of which have assets that exceed $1.3 billion, and $2.9 billion, respectively.

Schwab’s entrance into the world of ETFs has been impressive in terms of how quickly its new funds have gathered about $1.5 billion in assets.

Much of that has to do with the firm’s strategic commitment to low costs for investors. It cemented that reputation in spring by undercutting all its competitors, a move we wrote about here in a piece titled Schwab Declares Price War With ETF Fee Cuts.

Schwab didn’t disclose a ticker or an expense ratio in the filing.

ETF.COM CHANNELS

Interested in China? Use our China ETFs Channel, library, and ETF screener.

Interested in oil? Use our oil ETFs channel, library and ETF screener!

ETF DAILY DATA

The largest gold miners ETF lost assets on Thursday, April 28.

BlackRock's ETF assets gained $859 million on Thursday, April 28.

ETF.COM ANALYST BLOGS

By Drew Voros

With the broad equity ideas all taken, issuers look for thinner slices of exposure.

By David Lichtblau

How funds wash away capital gains through create/redeem process.

By Dave Nadig

End investors are the big winners; brokers—not so much.

By Dave Nadig

ETF industry petitions the SEC for market microstructure changes.

ETF INDUSTRY PERSPECTIVE

By Sprott Asset Management

New fund’s underlying index targets equities sentiment on social media.

By Kristi Kuechler

Avoid taking unrewarded—or unintended—risks.

By Vanguard

The investing giant outlines its expectations for the markets and global economy in 2016.