Charles Schwab continued its aggressive entry into the ETF business with two additions to the lineup yesterday (1/14/10). Schwab International Small-Cap Equity (SCHC) and Schwab Emerging Markets Equity (SCHE) began trading yesterday, with more volume in the first hour than some ETFs show in a month.
Like other Schwab ETFs, SCHC and SCHE are eligible for commission-free online trading in Schwab brokerage accounts. This was no doubt a factor in Schwab’s ability to attract $348 million into its ETFs in less than two months. As we noted back in November, Schwab has created a watershed event for the industry. Competitors will have to respond sooner or later.
As for the newest offerings, both are internationally-focused and feature lower expense ratios (0.35% in both cases) than similar ETFs from other sponsors.
- SCHC (summary) tracks the FTSE Developed Small Cap ex U.S. Liquid Index, which consists of around 2,000 international small cap stocks from 24 developed markets, excluding the U.S. The largest holdings are from Canada. A liquidity rule requires all stocks in the index have a float-adjusted market cap of at least $150 million.
- SCHE (summary) follows the FTSE All-Emerging Index of approximately 740 stocks from 22 emerging markets. Brazil and China dominate the index, together accounting for over a third of the portfolio. Taiwan and India are also top holdings.
Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.