Schwab, the discount broker and money management firm that rolled out its first ETFs in November 2009, posted a 16 percent rise in second-quarter earnings, including a one-time gain, as total client assets rose 9 percent to $1.802 trillion.
Schwab earned $275 million, or 20 cents a diluted share, compared with $238 million, or 20 cents in the 2011 second quarter. Results in the current-year quarter included an after-tax gain of $44 million related to the previously disclosed resolution of a vendor dispute. Outstanding shares rose, diluting its EPS.
The San Francisco-based firm, which offers some of the cheapest exchange-traded funds on the market, said in a press release it had $6.7 billion in ETF assets at the end of June, or more than 50 percent above the $4.4 billion at the end of the same year-earlier period. Assets in its managed portfolio ETFs were $2.4 billion, down from $2.7 billion a year earlier.
Schwab’s net revenues rose 8 percent to $1.28 billion from $1.19 billion. Total expenses, excluding interest, rose to $851 million from $804 million, the company said. Trading revenue rose 6.4 percent to $219 million from $205 million.
“Environmental headwinds picked up yet again during the quarter, including further declines in long-term interest rates,” Schwab Chief Financial Officer Joe Martinetto said in the press release. “Our second quarter financial performance benefited from the company’s diversified revenue streams as well as our growing client base and expense discipline.”
Among other highlights of the quarter, the company said assets at Windhaven, Schwab’s Boston-based advisory unit specializing in ETF investment portfolios, rose sequentially by 8 percent from 2012’s first to second quarters, to $11.1 billion.
Smart beta isn’t smarter than cap weighting, but it is different, and that’s great for investors.
Trial by fire is one way to discover why ETF transparency matters.
Most people now realize leveraged ETFs can hurt you, but how, then, to use them?
What would a shift out of a mutual fund and into an ETF look like up close?