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Cost-cutter Schwab plans first new ETF in nearly four years

Published 07/14/2017, 05:39 PM
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By Trevor Hunnicutt

NEW YORK (Reuters) - Cost-cutting U.S. brokerage and asset manager Charles Schwab (NYSE:SCHW) Corp is making plans to launch what could be its first new exchange-traded funds in nearly four years, a filing with U.S. regulators showed on Friday.

Schwab 1000 Index ETF would be a plain-vanilla fund tracking the largest 1,000 stocks in the United States, as measured by an index the company developed itself.

The filing with the U.S. Securities and Exchange Commission did not disclose fees, but San Francisco-based Schwab has grown its share of the market by offering funds at low cost and cutting expenses competitively.

The proposed ETF already exists as a mutual fund, which charges $5 a year for every $10,000 managed.

In some instances the company has announced price cuts just hours after a competitor, such ETF asset leaders BlackRock Inc (NYSE:BLK) or Vanguard Group, announced their own markdowns.

A company spokeswoman declined to comment.

Across all its products, Schwab Investment Management managed more than $300 billion on March 31. It launched its first ETFs in 2009.

ETFs are a basket of stocks, bonds or other assets. They often track an index, rather than trying to beat the market.

Asset managers are increasingly building those indexes themselves, allowing them to develop new investment strategies or save on licensing fees they would pay an index provider, such as S&P Dow Jones Indices, FTSE Russell or MSCI Inc.

(This version of the story corrects cost of fund to $5 from $3 for every $10,000 managed, in fourth paragraph)

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