The Charles Schwab Corporation (SCHW) is expanding its commission-free exchange-traded fund (ETF) offering, announcing the addition of 12 new ETFs. In a press release this week, the San Francisco-based discount brokerage announced that the new ETFs will be part of OneSource, its commission-free ETF program that provides investors and advisors with access to 245 ETFs covering 69 Morningstar categories without any commissions or enrollment requirements and zero early redemption fees.
In the press release, the company said that the ETFs without any commissions attached to them come from 16 fund providers: ALPS, Deutsche Asset Management, Direxion, ETF Securities, Global X Funds, Guggenheim Investments, IndexIQ, John Hancock Investments, J.P. Morgan Asset Management, OppenheimerFunds, PIMCO, PowerShares, State Street Global Advisors SPDR ETFs, USCF, WisdomTree and Charles Schwab Investment Management. Schwab noted that PIMCO is doubling the amount of ETFs it offers via OneSource with three multi-factor funds. (Check out the Charles Schwab review to learn more about the brokerage's fees.)
"As we approach the five-year anniversary of ETF OneSource, we're incredibly proud of the growth this program has achieved and that it continues to capture investor interest," said Heather Fischer, vice president of ETF and mutual fund platforms and client solutions strategy at Charles Schwab, in prepared remarks. "According to our research, trading ETFs without commissions or other fees continues to grow in importance for investors, so we're thrilled to continuously expand our selection of ETFs. The fact that ETF providers continue to see value in the program is demonstrated by the ETFs they've continued to add to our program."
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The move on the part of Schwab to expand its commission-free ETF offering comes at time when the ETF market is exploding, with Schwab a big beneficiary. Morningstar, which tracks inflows and outflows into mutual funds and ETFs, said that the discount brokerage has $24.3 billion in new net ETF assets through November 2017. That marks roughly 30% year-over-year growth.
While it still pales in comparison to BlackRock, Inc. (BLK) and Vanguard when it comes to ETFs, Schwab has surpassed State Street as it makes inroads in the market. Morningstar said that BlackRock had $198.4 billion in new ETF assets through November, while Vanguard had $127.7 billion and State Street had $15.5 billion in net new sales, according to Investment News.
Currently, there are more than 1,700 ETFs for investors to choose from – and that's in the U.S. alone. While Schwab has not been the leading player in ETFs, it is trying to build that side of the business, announcing earlier this fall the Schwab 1000 Index ETF (SCHK), which provides investors with a low-cost way to gain exposure to the 1,000 largest stocks in the U.S.