Charles Schwab, in a move sure to ripple across the entire ETF industry, announced on Thursday the launch of Schwab ETF OneSource, described as “a new ETF platform that gives investors and advisors access to the most commission-free ETFs anywhere in the industry”. For all of the potential benefits that ETFs can provide investors – from lower costs and greater tax efficiency, to more transparency and better diversification – one knock has always been trading commissions. Since ETFs trade on the exchanges, just like individual stocks, investors typically must pay a trading commission when buying or selling shares. With the rollout of Schwab’s ETF OneSource platform, investors can buy or sell shares of 105 ETFs – including all 15 of Schwab’s ETFs – without incurring trading commissions.
While Schwab isn’t the first to rollout such an offering (TD Ameritrade already offers 101 commission free ETFs), the introduction of Schwab ETF OneSource further signals the arrival of ETFs at a time when mutual funds continue to cede assets to ETFs. Said Charles Schwab’s CEO Walt Bettinger, “Just as Schwab Mutual Fund OneSource changed the landscape for investors and advisors by providing convenient, affordable access to leading mutual funds when Chuck Schwab introduced it twenty years ago, we believe Schwab ETF OneSource will deliver enormous benefit and change the way our clients buy and sell ETFs”. While mutual funds may have been the preferred way to go for investors 20 years ago, Schwab seems to be acknowledging that investors are now gravitating towards ETFs.
The reasons why investors are moving to ETFs are plentiful. As Bettinger explained in Schwab’s announcement, “Today’s investors, and the advisors who serve them, want sophisticated, low-cost strategies and more control over their investment choices and outcomes”. At The ETF Store, we believe ETFs provide us with the ability to offer more sophisticated, lower cost strategies to our clients while at the same time allowing a greater level of control over things such as active manager risk, buy/sell decisions, and taxable events. As we discussed with Schwab’s Director of ETF Capital Markets back in October, investors continue to be the clear winners of the continued innovation and competition in the ETF space. With Schwab’s ETF platform, it’s our belief that the benefits of ETFs for investors just keep getting better.
