Charles Schwab Continues ETF Ascent

Charles Schwab Corp. SCHW was a late entrant to the exchange traded funds business, debuting its first ETFs six years ago, but the California-based brokerage giant is making up for lost time.

At the end of the third quarter, ETF assets custodied at Schwab climbed 10 percent on a year-over-year basis to $237 billion, according to Schwab Third-Quarter Snapshot. Bond funds have been prolific asset gatherers this year with fixed income ETFs listed around the world now home to combined $500 billion in assets under management. Schwab is getting a piece of that action as more than half of the company's third-quarter ETF inflows went into bond funds with a third going into U.S. equity products, according to Schwab data.

“RIA Clients captured 49% of the 12-month ETF flows, up from 44% last year. Although ETF flows for all client segments were up year over year, share of flows were slightly down for Retail Traders and Retail Investors due to slower growth,” said Schwab. “Q3 '15 ETF flows were $5B, contributing to 12-months flows through September ’15 of $33B, up 57% over the prior 12-month period."

Earlier this month, Schwab expanded what is already the exchange-traded fund industry's largest commission-free platform with the addition of five currency hedged funds to Schwab ETF OneSource.

ALPS, Direxion, ETF Securities, Global X Funds, Guggenheim Investments, IndexIQ, J.P. Morgan Asset Management, PIMCO, PowerShares, ProShares, State Street SPDR ETFs, United States Commodity Funds, WisdomTree and Charles Schwab Investment Management are the issuers featured on Schwab ETF OneSource.

With this month's additions, “investors can now buy and sell 214 ETFs covering 66 Morningstar Categories with $0 online commissions, no enrollment requirements and no early redemption fees – key differentiators for investors comparing Schwab ETF OneSource to other commission-free ETF offerings,” said California-based Schwab in a statement.

At the end of August, OneSource had $44.2 billion in assets under management, $8.1 billion of which had arrived this year.

With $36.7 billion in ETF assets under management as of October 16, Schwab is the seventh-largest U.S. ETF issuer. On its own, that statistic is impressive, but it is even more so when considering the company issues just 21 ETFs and has not introduced a new product since 2013.

Only four ETF sponsors have hauled in more new assets this year than Schwab. As is the case with other issuers, strategic beta offerings are helping drive Schwab's ETF asset growth. At the end of the third quarter, Schwab's fundamentally-weighted ETF lineup had over $2.6 billion in combined assets under management, nearly triple the end of 2014 number, according to issuer data.