ETF Watch: Schwab Responds To BlackRock Fund Fee Cuts

October 07, 2016

After BlackRock's iShares unit slashed fees on 15 of the ETFs in its "Core" family of funds aimed at advisors, Charles Schwab has struck back by lowering the fees on five of its ETFs by 1 basis point.

The iShares costs had been cut to match those of Schwab, but now five key Schwab ETFs are each precisely 1 basis point cheaper than their primary competitors.

 

Fund Ticker Former ER New ER
Schwab U.S. Small-Cap ETF SCHA 0.07% 0.06%
Schwab U.S. Mid-Cap ETF SCHM 0.07% 0.06%
Schwab International Equity ETF SCHF 0.08% 0.07%
Schwab Emerging Markets Equity ETF SCHE 0.14% 0.13%
Schwab U.S. Aggregate Bond ETF SCHZ 0.05% 0.04%

 

Schwab reaffirmed its dedication to low-cost investment solutions with the fee cuts.

"The appeal of index investing continues to accelerate. When individuals invest their hard-earned money, they are increasingly searching for low-cost, transparent, enduring products. It's our mission to deliver on that, and we are proud that CSIM has been the catalyst for helping investors access lower-cost ETFs across the industry," said Marie Chandoha, president and CEO of Charles Schwab Investment Management.

Legg Mason Plans Infrastructure Fund

Legg Mason, which currently has a family of five ETFs and roughly $100 million in ETF assets under management, has filed for an ETF that will target companies falling into the global infrastructure bucket. The Legg Mason Global Infrastructure ETF will track the Rare Global Infrastructure index and comes with an expense ratio of 0.53%. The filing did not include a ticker or listing exchange.

According to the prospectus, companies included in the index include electric, gas and water utilities; power producers and energy traders; renewable electricity and multi-utilities as well as airport services; cable and satellite TV providers, highways and railways; marine ports and services; oil and gas storage and transportation; and specialized REITs. Firms are evaluated based on their market capitalization, volume, dividend yields and operating cash flow yield, and individual security weightings are assigned based on a firm's market capitalization with respect to its exposure to the infrastructure space and based on its stock volatility.

The 75 to 200 companies in the index are selected from 23 emerging and developed countries. Each one is weighted at between 0.10% and 5% of the index, while sector weights fall between 40% and 60%, and are arrived at using the OECD G7 Leading Indicators Index. The prospectus notes that the companies in the fund's underlying index are generally of high quality.

Contact Heather Bell at [email protected].

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