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Schwab Has An Answer In Latest ETF Fee Tussle

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Schwab Has An Answer In Latest ETF Fee Tussle

Last week, BlackRock, Inc. (NYSE: BLK) iShares unit, the world's largest sponsor of exchange-traded funds, shook the ETF industry with wide-ranging fee reductions to its iShares core lineup, a suite of ETFs designed four years with cost-conscious, long-term investors in mind.

All told, iShares lowered fees on 15 of its 22 core ETFs, including well-known offerings such as the iShares Core S&P 500 Index (ETF) (NYSE: IVV), iShares S&P SmallCap 600 Index (ETF) (NYSE: IJR), iShares Core High Dividend ETF (iShares Trust NYSE: HDV)) and the iShares Barclays Aggregate Bond Fund (NYSE: AGG).

Mirroring Strategies

As is par for the course in the ETF business, fee cuts from one issuer are usually followed by some from a rival and usually that happens in short order. That is again the case as Charles Schwab Corp (NYSE: SCHW) responded to the iShares fee cuts with its own fee reductions, announced last Friday.

Related Link: Inside BlackRock's ETF Fee Cuts

Schwab, the fifth-largest U.S. ETF issuer, said it lowered fees on five of its ETFs, which already among the industry's least expensive. The company lowered the annual expense ratios on the Schwab U S Small-Cap ETF (NYSE: SCHA) and the Schwab Strategic Trust (NYSE: SCHM) to 0.06 percent, or $6 per year on a $10,000 investment, from 0.07 percent.

The Schwab International Equity ETF (NYSE: SCHF) is now charging 0.07 percent per year, down from 0.08 percent while the Schwab Emerging Markets Equity ETF (NYSE: SCHE) saw its fee reduced to 0.13 percent annually down from 0.14 percent.

The Schwab Strategic Trust (NYSE: SCHZ) undercuts the aforementioned AGG by a single basis point with a new annual fee of 0.04 percent.

Schwab clients can realize additional cost savings on the company's Schwab ETF OneSource platform, the largest commission-free platform in the brokerage business.

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