Schwab Introduces Three Commission-Free Bond ETFs
Schwab added to its lineup of low cost ETFs last Thursday (8/5/10) with the introduction of its first three fixed income funds: Schwab U.S. TIPS ETF (SCHP), Schwab Intermediate-Term U.S. Treasury ETF (SCHR), and Schwab Short-Term U.S. Treasury ETF (SCHO).
These new offerings follow Schwab’s game plan of targeting core asset classes with extremely low expense ratios and commission-free trading for customers of Schwab brokerage. That game plan differentiates Schwab from competitors and has worked well so far. The firm has accumulated $1.4 billion in ETF assets since the launch of its first ETFs just nine months ago.
Schwab U.S. TIPS ETF (SCHP) will track the Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index with an expense ratio of 0.14%. SCHP will face off against iShares Barclays TIPS Fund (TIP), SPDR Barclays Capital TIPS ETF (IPE), and PIMCO Broad U.S. TIPS Index Fund (TIPZ). The three competitors have expense ratios of 0.19% to 0.20%.
Schwab Intermediate-Term U.S. Treasury ETF (SCHR) will track the Barclays Capital U.S. 3-10 Treasury Bond Index with an expense ratio of 0.12%. No other ETFs are based on this index, although iShares and PIMCO both have funds tracking 3-7 year Treasury bonds.
Schwab Short-Term U.S. Treasury ETF (SCHO) will follow the Barclays Capital U.S. 1-3 Treasury Bond Index with an expense ratio of 0.12%. It will directly compete against iShares Barclays 1-3 Year Treasury (SHY) with its 0.15% expense ratio and PIMCO 1-3 Year Treasury Index Fund (TUZ), which has a 0.09% expense ratio.
Disclosure covering writer, editor, and publisher: Long SHY and TIP. 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.