Charles Schwab continued the ETF industry's downward pressure on fees by announcing last week that it is drastically reducing the expense ratios charged by several of its exchange-traded products. Schwab, which pioneered the concept of commission-free trading for ETFs within the last few years, joins a long list of issuers who have reduced fees in an effort to woo cost conscious investors. Though Schwab ETFs generally maintain low expense ratios to begin with, some of the cuts were substantial. For example, expenses on the Schwab Equity Income ETF (SCHD) declined by more than 50%, dropping from 0.17% to 0.07%. That makes SCHD the cheapest dividend ETF, surpassing Vanguard's VIG and VYM.Schwab is now home to the cheapest ETFs on the market as well; both the Multi Cap Core ETF (SCHB) and Large Cap Core ETF (SCHX)will have expense ratios of just four basis points. Previously, those ETFs charges 0.06% in annual fees. In total, Schwab cut fees on all 15 of its ETFs, including products offering exposure to domestic and international stock markets, fixed income securities and REITs. The changes to expense ratios were effective September 20. The new expense structures for Schwab ETFs are as follows:

US Broad Market ETF (SCHB) 0.04% 0.06%
US Large-Cap ETF (SCHX) 0.04% 0.06%
US Large-Cap Growth ETF (SCHG) 0.07% 0.13%
US Large-Cap Value ETF (SCHV) 0.07% 0.13%
US Dividend Equity ETF (SCHD) 0.07% 0.17%
US Mid-Cap ETF (SCHM) 0.07% 0.13%
US Small-Cap ETF (SCHA) 0.10% 0.13%
US REIT ETF (SCHH) 0.07% 0.13%
International Equity (SCHF) 0.09% 0.13%
Emerging Markets Equity ETF (SCHE) 0.15% 0.25%
International Small-Cap Equity ETF (SCHC) 0.20% 0.35%
Short-Term US Treasury ETF (SCHO) 0.08% 0.12%
Intermediate-Term US Treasury ETF (SCHR) 0.10% 0.12%
US Aggregate Bond ETF (SCHZ) 0.05% 0.10%
US TIPS ETF (SCHP) 0.07% 0.14%

"In this period of uncertainty in the markets, the expenses investors pay are the only sure thing, said CEO Walt Bettinger.As a long-time advocate for investors, we want to offer our clients a truly low-cost way to build a diversified portfolio.

Among the other highlights from the recent price cuts:

  • SCHE is now the cheapest emerging markets ETF at just 15 basis points, surpassing VWO
  • SCHZ is now the cheapest ETF in the Total Bond Market ETFdb Category at 0.05%; previously, it was tied with BND at 0.10%.
  • SCHH is now the cheapest ETF in the Real Estate ETFdb Category, passing up VNQ.

In aggregate, Schwab is home to some $140 billion in client ETF assets. Schwab ETFs now have more than $7 billion in aggregate AUM.

Disclosure: No positions at time of writing.

Related Articles
  1. Economics

    The Biggest Oil Producers in Latin America

    Find out which countries produce the most oil in Latin America, and learn about some of the biggest oil companies operating in each country.
  2. Professionals

    Are ETFs a Good Fit for 401(k) Plans?

    The popularity of ETFs among investors and advisors continues to grow. But are they a good fit for 401(k) plans?
  3. Stock Analysis

    Will WYNN Continue to Rally?

    Wynn Resorts has experienced a rally recently. Will it remain a good bet?
  4. Stock Analysis

    Don't Be Fooled by the Market's Recent Rally

    The bulls won for a bit in early October, but will bears have the last laugh?
  5. Stock Analysis

    Will Twitter's Stock Find its Wings Soon?

    Twitter is an enigma to many investors, but its story is pretty straightforward.
  6. Mutual Funds & ETFs

    The Top Vanguard Emerging Market ETF

    Learn why growth investors should consider investing in VWO's portfolio of emerging market stocks.
  7. Stock Analysis

    8 Solid Utility Stocks for a Bear Market

    If you're seeking modest appreciation, generous dividend payments and resiliency, consider these eight utility stocks.
  8. Investing Basics

    How to Pick the Best Muni Bonds and Muni Bond ETFs

    Municipal bonds are a good addition to a diversified portfolio as long as you choose correctly based on population and local economic trends.
  9. Stock Analysis

    Why Phillips 66 (PSX) is a Solid Long-Term Bet

    Here's why Phillips 66 will likely remain one of the world’s largest and most profitable companies for a long time to come.
  10. Mutual Funds & ETFs

    Top 3 Emerging Markets Bond Mutual Funds

    Discover detailed analysis of the top three mutual funds offering exposure to the emerging markets bonds, and learn about the suitability of these funds.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!