ETF Success Found At Different Levels

August 03, 2016

When you hear talk about the ETF issuers and the industry, certainly much of it has to do with how the big ETF issuers keep getting bigger, and that while the barrier to entry for a new fund is low, the threshold for success is very high, especially for smaller players.

While much of that may be true, it’s easy to fall into the trap that success is too steep a hill to climb for most, because in fact, it can really be found at all levels of the ETF spectrum.

Of course, at the top end of the ETF League is BlackRock’s iShares brand, which should soon become the first issuer to amass $1 trillion in assets. As of the end of July, the firm had some $915 billion, nearly $100 billion more in assets under management than it had at the end of July 2015. You don’t need to be a math whiz to see that the $1 trillion mark could easily be achieved in 2017.

And Vanguard, the No. 2 ETF issuer as measured by AUM, has also had a strong past 12 months, going from roughly $477 billion to $560 billion in those same 12 months, which is a bigger percentage increase than iShares. Few would be surprised by those two examples of success. We hear about them all the time.

Size Doesn’t Matter

But the point of this piece is to shed some light on a few success stories that are not as apparent or repeated. Case in point would be Charles Schwab, which, in percentage terms, had a better 12 months in attracting assets than the oft-talked-about Top Two.

The firm has been quietly climbing the ETF leader board, and last month, the firm topped $50 billion in assets, up more than 40% from its assets level of about $35 billion at the end of July 2015, making it now the fifth-largest ETF issuer.

The company has been offering commission-free Schwab ETFs on its platform, and has become the leader in cutting expense ratios as well. Out of the 20 cheapest ETFs on the U.S. market, 10 are from Schwab—double the nearest competitor, iShares, which has five.

20 Cheapest ETFs

Ticker Fund Issuer Expense Ratio
XLRE Real Estate Select Sector SPDR Fund SSgA 0.00%
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF Guggenheim 0.00%
SCHB Schwab U.S. Broad Market ETF Charles Schwab 0.03%
SCHX Schwab U.S Large-Cap ETF Charles Schwab 0.03%
ITOT iShares Core S&P Total U.S. Stock Market ETF BlackRock 0.03%
VTI Vanguard Total Stock Market Index Fund Vanguard 0.05%
VOO Vanguard S&P 500 Index Fund Vanguard 0.05%
SCHZ Schwab US Aggregate Bond ETF Charles Schwab 0.05%
BND Vanguard Total Bond Market Index Fund Vanguard 0.06%
SCHG Schwab U.S. Large-Cap Growth ETF Charles Schwab 0.06%
SCHV Schwab U.S. Large-Cap Value ETF Charles Schwab 0.06%
IVV iShares Core S&P 500 ETF BlackRock 0.07%
SCHD Schwab US Dividend Equity ETF Charles Schwab 0.07%
SCHA Schwab U.S. Small-Cap ETF Charles Schwab 0.07%
SCHH Schwab U.S. REIT ETF Charles Schwab 0.07%
SCHM Schwab U.S. Mid-Cap ETF Charles Schwab 0.07%
SCHP Schwab US TIPS ETF Charles Schwab 0.07%
IUSG iShares Core U.S. Growth ETF BlackRock 0.07%
IUSV iShares Core U.S. Value ETF BlackRock 0.07%
AGG iShares Core U.S. Aggregate Bond ETF BlackRock 0.08%


Schwab has also helped itself with its robo service, Intelligent Portfolios, which uses Schwab ETFs to deliver automated portfolios for the masses. Certainly that ecosystem of commission-free ETFs—very cheap to own ETFs and a robo service using Schwab ETFs—is fueling growth in a unique way.


Find your next ETF

Reset All