Should You Switch to Lower-Cost Schwab ETFs?
ETF news highlights, and the best- and worst-performing ETFs last week.
Last week, Schwab cut the expense ratio on six of its eight ETFs. Now, all eight Schwab ETFs sport the lowest expense ratios among competing products from iShares, Vanguard, and State Street. Schwab entered the ETF market last fall with a family of core ETF products, a segment of the market in which the large competitors dominate with multibillion dollar funds such as iShares MSCI Emerging Markets Index (EEM) and Vanguard Total Stock Market ETF (VTI). But with low expense ratios and no commission fees for customers on the Schwab platform, Schwab has been able to gather a significant $1.2 billion in assets in its eight funds in a relatively short period of time.
While expense ratios, bid-ask spreads, and trading volume are key factors to consider when deciding among ETFs, we also recommend that investors review funds' portfolio construction and target benchmarks so that they know what they own.
Patricia Oey does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.