Schwab Cuts Fees for ETFs as BlackRock Plans Reductions

Charles Schwab Corp. (SCHW), the largest independent U.S. brokerage by client assets, has cut fees by an average of 40 percent to attract more investors.

Schwab, which manages 15 proprietary ETFs holding $7.2 billion in assets, reduced costs to a weighted average of 7.7 basis points, down from 12.9 basis points, the San Francisco- based firm said today. The fees on its largest ETF, the Schwab U.S. Broad Market ETF, are now 4 basis points compared with 6 basis points, Schwab said in a statement. A basis point is one hundredth of a percentage point.

“This is a period of great uncertainty in the markets,” Walt Bettinger, Schwab’s president and chief executive officer, said in a conference call today. “The one certainty when you invest is expenses and we know that expenses detract from returns.”

BlackRock Inc. (BLK)’s Laurence D. Fink, who heads the world’s largest asset manager, said on Sept. 10 that the New York-based firm will reduce fees for its largest and most liquid ETFs next quarter. BlackRock, the world’s biggest ETF provider, has lost market share to Vanguard Group Inc, known for its low-cost funds.

Schwab started its own branded ETFs in November 2009. In addition to its own, Schwab offers ETFs managed by other providers. Schwab has $142 billion in total ETF assets, according to its statement.

Schwab also plans to release an ETF product for 401(k) retirement plans in 2013 or 2014, Bettinger said.

With assistance from Alexis Leondis in New York.

To contact the reporter on this story: Margaret Collins in New York at mcollins45@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net