We understand that today, more than ever, value is of great importance to you.
That’s why I’m pleased to share with you significant steps we’ve taken to reduce expenses and simplify the share classes in our Schwab Equity Index Funds. Now, everyone will enjoy:
Reduced fund expenses for all Schwab Equity Index Funds—as low as 0.09%. They’re now among the most affordable index funds available anywhere. The same low expense ratio in a fund regardless of the amount you invest—no need to worry about whether you are invested in a “special” share class to get our lowest fund expenses.
Making investing easier and more affordable for everyone is at the heart of Schwab’s philosophy. These improvements reflect our commitment to turning that philosophy into meaningful benefits for you and all our clients.
Thank you for investing with Schwab and for allowing us to help you reach your financial goals.
This may not seem like it, but its big news if true. I have to check it out. Currently Vanguard is the lowest on domestic index funds with 0.15% and then something around 0.10% on Admiral class ($100k minimum). Since Schwab also now holds my 2% credit card and pretty good checking account, it might make my life simplier to move my VG assets to Schwab - at least the IRA holdings that I can essentially liquidate without tax consequences and move over. I would have to lose market exposure for that time frame though of a few weeks for the transfer.
Also I heard that Schwab used to be very personal consumer friendly and then shifted towards larger clients and bumped up fees and has only recently been coming back after the home investor. I would hate to move everything to Schwab only to get pissed off with new fees in a few years if they decide to shift their client-base again.
oopsz said: Well, good for schwab, but how does it compare to the ratio on Fidelity and Vanguard funds?
I assume schwab funds are no load, no fee if you use a schwab brokerage account?
Its about 50% cheaper.
Vanguard International index is 0.40% compared to 0.19% on the new Schwab one.
VG TSM is 0.15% compared to 0.09% on Schwab.
In all fairness the actual operating costs of the Schwab funds are the same as they always were but they are not offering a 70% waiver - from 0.38% down to 0.09%. Who knows how long this will last.
wilkinru
Senior Member
posted: May. 6, 2009 @ 4:23p
This is a very good thing, lets hope it turns into a trend.
Schwab Equity Index Fund Expense ratio Fund1 Industry average2 Schwab S&P 500 Index Fund (SWPPX) 0.09% 0.47% Schwab Total Stock Market Index Fund® (SWTSX) 0.09% 0.47% Schwab 1000 Index Fund® (SNXFX) 0.29% 0.47% Schwab Small-Cap Index Fund® (SWSSX) 0.19% 0.77% Schwab International Index Fund® (SWISX) 0.19% 0.56%
captainwho
Senior Member
posted: May. 6, 2009 @ 4:25p
wilkinru said: This is a very thing, lets hope it turns into a trend.I totally your post.
76hhma said: captainwho said: wilkinru said: This is a very thing, lets hope it turns into a trend.I totally your post.
I am entirely about it.
robobert
Member
posted: May. 6, 2009 @ 4:55p
A quick comparison of total stock market index fund minimums and expense ratios (sorted by their minimums):
$100 Min, 0.09% ER - SWTIX - Schwab Total Market Index
$3,000 Min, 0.15% ER - VTSMX - Vanguard Total Stock Market Index (Investor)
$10,000 Min, 0.10% ER - FSTMX - Fidelity Spartan Total Market Index
$100,000 Min, 0.07% ER - VTSAX - Vanguard Total Stock Market (Admiral)
$100,000 Min, 0.07% ER - FSTVX - Fidelity Spartan Total Market Index (Advantage)
I don't know if I expect this to last forever, but this is a great deal for people who are just starting out. With Vanguard, if you want just a simple three fund balanced portfolio (US Stock/Int Stock/Bonds), you'd need to either hope they have one with the exact ratios you want, or you need $12,000 to start. With Schwab, you'd just need $300.
mike.... I would like to thank you for the post. I know you don't believe that low cost total funds do better than managed funds. Thanks for posting this for those of us who believe otherwise and that this will help out.
mikef07
Senior Member - 3K
posted: May. 6, 2009 @ 9:53p
umcsom said: mike.... I would like to thank you for the post. I know you don't believe that low cost total funds do better than managed funds. Thanks for posting this for those of us who believe otherwise and that this will help out.
I think most low cost index funds destroy most managed funds. I do think there are some decent fund families on the managed side which I choose to own. I plan to diversify by holding both managed and index funds.
Schwab actually has an EXCELLENT "total package" of financial services , for those people who like everything at one place...and with competent customer service to boot.
From their 2% credit card, decent interest checking account, no fee IRAs, and now these expense cuts, they may not be the "absolute best" in every area, but overall their products are pretty good choices.
Effective May 5, 2009, the net operating expense ratios of the Schwab S&P 500 Index Fund and the Schwab Total Stock Market Index Fund® are limited to 0.09%. Net operating expenses of other Equity Index Funds are also limited and will range from 0.19% to 0.29%. Equity Index Funds do not include the Schwab Fundamental Index Funds. (Fundamental Index is a registered trademark of Research Affiliates, LLC.) See a fund’s prospectus for more information on expense limitations.
robobert said: A quick comparison of total stock market index fund minimums and expense ratios (sorted by their minimums):
$100 Min, 0.09% ER - SWTIX - Schwab Total Market Index
$3,000 Min, 0.15% ER - VTSMX - Vanguard Total Stock Market Index (Investor)
$10,000 Min, 0.10% ER - FSTMX - Fidelity Spartan Total Market Index
$100,000 Min, 0.07% ER - VTSAX - Vanguard Total Stock Market (Admiral)
$100,000 Min, 0.07% ER - FSTVX - Fidelity Spartan Total Market Index (Advantage)
I don't know if I expect this to last forever, but this is a great deal for people who are just starting out. With Vanguard, if you want just a simple three fund balanced portfolio (US Stock/Int Stock/Bonds), you'd need to either hope they have one with the exact ratios you want, or you need $12,000 to start. With Schwab, you'd just need $300.
This is exactly what I was looking for. Thank you!
goGTinDML
Senior Member
posted: May. 7, 2009 @ 9:27a
Anyone have any idea what the Schwab IRA Sweep Account would be? The Sweep for the brokerage account pays next to nothing.
Billywillyphant
Member
posted: May. 7, 2009 @ 5:29p
goGTinDML said: Anyone have any idea what the Schwab IRA Sweep Account would be? The Sweep for the brokerage account pays next to nothing.
.02%
demku
Member
posted: May. 8, 2009 @ 10:39a
The comparisons between Schwab and Vanguard are wrong as of 4/29/2009. The Vanguard expense ratios have gone up. For example, the ER for VTSMX is now 0.18%. Third party sites such as Yahoo still show the old ratios. For updated information look at the fund page on Vanguard. So now that makes that ER for SWTIX exactly half of the same fund for Vanguard. That really translates to about $9 cheaper per year per $10,000. Even Admiral is up to 0.09% same as Schwab. Hmmmm $100 for Schwab or $100,000 for the same fund at Vanguard?
brolic
Member
posted: May. 8, 2009 @ 2:38p
This is exciting news. Thanks for the post. Plus the low $100 initial investment (and $1! subsequent investement) minimum is excellent! With all the volatility right now, I want to dollar cost average into a position, and the $3000 initial investment minimums at Vanguard would be a substantial chunk of what I have to invest right now (and with the low subsquent investment minimums, I can just sweep my 2% Schwab visa card CashBack into an index fund. Every little bit helps!).
Let's just hope they keep the waivers/reductions in fees at this level for a few years. And I wonder if Vanguard, Fidelity, et. al., will match? Regardless, Schwab was the first mover and they're gonna get my cash!
I'm currently with Vanguard. I may have to take a serious look at switching because of this. I only invest in index funds so this is a big deal to me. I have the Schwab Visa too. If Schwab only offered a rewards checking account they'd have a full range customer in me!
UncaMikey
Happy Member
posted: May. 11, 2009 @ 3:36p
brolic said: And I wonder if Vanguard, Fidelity, et. al., will match? Regardless, Schwab was the first mover and they're gonna get my cash!
First mover???
Fidelity cut the expense ratio on their index funds several years ago, to below Vanguard's. If you have enough money to get into the Advantage class, they're still the lowest.
As for banking, Fidelity's ACH capability alone makes them far more versatile than Schwab's banking products. I've used Fidelity as my financial hub for several years, with not a single hiccup. My first few months w/ Schwab have had several problems, all fixed but annoying nonetheless.
I don't want to start a Fidelity/Vanguard/Schwab battle. I have the Schwab 2% Visa (and brokerage and checking accounts as part of the same deal). I am pleased they are entering this market, it's good for all of us. But Schwab is following, not leading. If you're already at Schwab, this is good news. But this is hardly a reason for Vanguard or Fidelity customers to consider switching.
UncaMikey
Happy Member
posted: May. 11, 2009 @ 3:40p
tripleB said: Currently Vanguard is the lowest on domestic index funds with 0.15% ...
Not true. Fidelity's index funds have an expense ratio of 0.10%, but they do require a $10K minimum.
busterbaxter
Senior Member - 1K
posted: May. 12, 2009 @ 3:48p
thanks OP. This sounds like a good deal for those who have the 2% reward card/brokerage combo to dollar-cost-average the rebates!
By the end of 2009, Schwab plans to launch its first series of proprietary ETFs that will be made available not only to clients who invest through financial advisers but to its self-directed clients as well, says Merk. It's an effort to be more relevant to investors who balk at paying fees on an index mutual fund when ETFs are so cheap, says Jeff Mortimer, Schwab's chief investment officer.
brolic
Member
posted: May. 13, 2009 @ 5:12p
UncaMikey said: First mover???
Fidelity cut the expense ratio on their index funds several years ago, to below Vanguard's. If you have enough money to get into the Advantage class, they're still the lowest.
Advantage class is a $100k minimum!
I think the Schwab funds are great deals right now. Especially for people with (a) under $100k, and (b)--regardless of whether you have $1m, $100k, or $1k--those looking to dollar cost average into an index fund position in this volatile market.
busterbaxter
Senior Member - 1K
posted: May. 21, 2009 @ 12:46a
dup post, deleted
busterbaxter
Senior Member - 1K
posted: May. 21, 2009 @ 12:46a
wilkinru said: This is a very good thing, lets hope it turns into a trend.
Schwab Equity Index Fund Expense ratio Fund1 Industry average2 Schwab S&P 500 Index Fund (SWPPX) 0.09% 0.47% Schwab Total Stock Market Index Fund® (SWTSX) 0.09% 0.47% Schwab 1000 Index Fund® (SNXFX) 0.29% 0.47% Schwab Small-Cap Index Fund® (SWSSX) 0.19% 0.77% Schwab International Index Fund® (SWISX) 0.19% 0.56%
so as I can see, only the first 2 are competitive if you have a brokerage account that gives you free trades (Wells Fargo, BofA)
For the 4th one, Vanguard's ETF VB has an expense ratio of 0.15. For the 5th one which tracks EAFE, Vanguard's VEA has an expense ratio of 0.16%
For SP500, it equals IVV or SPY in expense ratios. For Total Stock Market, it equals VTI in expense ratios.
Still, I would say this is a great deal for people who just start investing with a small sum of money, and are looking forward to dollar-cost average routinely.
seugene
Happy Member
posted: Jun. 21, 2009 @ 5:50p
Be careful with what happens next, especially if it does not happen soon. Schwab and the investment adviser have agreed to limit the fund's "net operating expenses" as stated in the prospectus for each fund, for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the fund's Board of Trustees. Translation: you happily invest with them, adding to the position regularly over the next several years, then they realize they've gotten enough assets with this loss leader and they vote to raise the fees. If it is a taxable account, you are faced with a fat capital gains tax if you switch to another fund. So, consider investing in a tax-deferred or tax-free account only.
Fidelity had the same problem when they slashed some of their index fees to bellow those of Vanguard, which Vanguard promptly pointed out in a couple of articles, to which Fidelity reacted by changing things so that fees can be increased only by shareholder vote. Much better, although the probability of shareholder blackmail is still non-zero ("Dear Valued Shareholder, Times are hard, we are managing the funds very efficiently, but cannot afford to lose as much money and will dissolve the fund if the suggested fee increase is voted down").
seugene said: Translation: you happily invest with them, adding to the position regularly over the next several years, then they realize they've gotten enough assets with this loss leader and they vote to raise the fees. If it is a taxable account, you are faced with a fat capital gains tax if you switch to another fund. So, consider investing in a tax-deferred or tax-free account only.
Interesting analysis. What are other people's thoughts on this? Given that they might change the fees, does it only make sense to invest in a tax-deferred or tax-free account?
somdave2005
Senior Member
posted: Jun. 21, 2009 @ 6:44p
Those Expense ratio look nice, and put them along with Schwab's credit card/checking account makes Charles Schwab package unbeatable. But sounds like everyone here is skeptical that this won't last and is just a promo.
somdave2005
Senior Member
posted: Jun. 22, 2009 @ 10:33p
Anyone else thinking of switching over to Charles Schwab now that their Index funds have the lowest expense ratios in the industry? even lower than Vanguard and Fidelity. Their lower minimums to invest ($100) is also nice too. Couple it with their awesome checking/CC package, Charles Schwab is starting to look mighty good.
somdave2005 said: Anyone else thinking of switching over to Charles Schwab now that their Index funds have the lowest expense ratios in the industry? even lower than Vanguard and Fidelity. Their lower minimums to invest ($100) is also nice too. Couple it with their awesome checking/CC package, Charles Schwab is starting to look mighty good.
I'm in the process of liquidating my Roth account with Chase and transfer it to Charles Schwab since I already have checking account and CC with them. Before this post, I was planning to go with Vanguard.
somdave2005
Senior Member
posted: Aug. 29, 2009 @ 8:29a
Tyrobi said: somdave2005 said: Anyone else thinking of switching over to Charles Schwab now that their Index funds have the lowest expense ratios in the industry? even lower than Vanguard and Fidelity. Their lower minimums to invest ($100) is also nice too. Couple it with their awesome checking/CC package, Charles Schwab is starting to look mighty good.
I'm in the process of liquidating my Roth account with Chase and transfer it to Charles Schwab since I already have checking account and CC with them. Before this post, I was planning to go with Vanguard.
Yeah I made the switch already. I was already looking at Charles Schwab due to their checking/CC accounts, but the lowered expense ratios really sealed the deal for me, since I plan to mostly invest in stocks/mutual funds/ and bond funds.
olegos
Senior Member
posted: Nov. 6, 2009 @ 10:24a
Could someone explain what is being talked about in this article? What are these fee waivers, that may come to an end soon?
olegos said: Could someone explain what is being talked about in this article? What are these fee waivers, that may come to an end soon?
Hmm, it's not a very clearly written article. From what I can tell, they are talking about Money Market Funds, which are different from the Index Funds that this thread pertains to. So I'm guessing that it doesn't affect us (holders of their Index Funds) directly?
jdmetz
Thrifty Member
posted: Nov. 6, 2009 @ 11:00a
ohhenry1 said: olegos said: Could someone explain what is being talked about in this article? What are these fee waivers, that may come to an end soon?
Hmm, it's not a very clearly written article. From what I can tell, they are talking about Money Market Funds, which are different from the Index Funds that this thread pertains to. So I'm guessing that it doesn't affect us (holders of their Index Funds) directly?
Yes - this is about their money market funds, not their index funds (emphasis mine):
Charles Schwab Corp (SCHW.O) expects to waive about $100 million in money market fees in the current quarter
In the current rate environment they can't charge all their fees against the fund without making it break the buck, so they are having to waive those fees instead. These waivers will come to an end when the money in the fund is actually making enough to cover their expenses, and only after that point will the interest rate rise.
Schwab fees are up by 0.01% nearly across the board. S+P 500 didn't tick up, it is still at 0.09%.
demku
Member
posted: Dec. 29, 2009 @ 9:46a
lray said: Schwab fees are up by 0.01% nearly across the board. S+P 500 didn't tick up, it is still at 0.09%.
What? Where do you see that? Did you just make it up? They are still exactly where they were when the fees lowered. Not all of them where at 0.09, but s&p and total stock are still at 0.09.
honeymay98
Greedy Member
posted: Jan. 4, 2010 @ 4:43a
Does Schwab do a hard pull for opening an IRA account?
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