Schwab Has An Answer In Latest ETF Fee Tussle

Last week, BlackRock, Inc. BLK iShares unit, the world's largest sponsor of exchange-traded funds, shook the ETF industry with wide-ranging fee reductions to its iShares core lineup, a suite of ETFs designed four years with cost-conscious, long-term investors in mind.

All told, iShares lowered fees on 15 of its 22 core ETFs, including well-known offerings such as the iShares Core S&P 500 Index (ETF) IVV, iShares S&P SmallCap 600 Index (ETF) IJR, iShares Core High Dividend ETF (iShares Trust NYSE: HDV)) and the iShares Barclays Aggregate Bond Fund AGG.

Mirroring Strategies

As is par for the course in the ETF business, fee cuts from one issuer are usually followed by some from a rival and usually that happens in short order. That is again the case as Charles Schwab Corp SCHW responded to the iShares fee cuts with its own fee reductions, announced last Friday.

Related Link: Inside BlackRock's ETF Fee Cuts

Schwab, the fifth-largest U.S. ETF issuer, said it lowered fees on five of its ETFs, which already among the industry's least expensive. The company lowered the annual expense ratios on the Schwab U S Small-Cap ETF SCHA and the Schwab Strategic Trust SCHM to 0.06 percent, or $6 per year on a $10,000 investment, from 0.07 percent.

The Schwab International Equity ETF SCHF is now charging 0.07 percent per year, down from 0.08 percent while the Schwab Emerging Markets Equity ETF SCHE saw its fee reduced to 0.13 percent annually down from 0.14 percent.

The Schwab Strategic Trust SCHZ undercuts the aforementioned AGG by a single basis point with a new annual fee of 0.04 percent.

Schwab clients can realize additional cost savings on the company's Schwab ETF OneSource platform, the largest commission-free platform in the brokerage business.

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