Charles Schwab

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Charles Schwab Corporation
Founded1971
FounderCharles R. Schwab
HeadquartersWestlake, Texas[1]
Number of locations
Over 360 branches
Key people
  • Charles R. Schwab
  • (Chairman)
  • Walter W Bettinger II
  • (President & CEO)
Products
AUMUS$3.25 trillion[2][3]
Number of employees
~32,000[2]
WebsiteSchwab

Charles Schwab Corporation, originally based in San Francisco, was founded in 1971 by Charles Schwab. The firm began discount brokerage on May 1, 1975.[4] An investor can implement the principles advocated in the Bogleheads investment philosophy by choosing index products available on the Schwab platform.

Indexing at Schwab

All ETFs are commission-free at Schwab, enabling use of ETF lineups from Schwab, SSGA, Vanguard and iShares.

Schwab also manages its own index mutual funds and exchange traded funds (ETFs). As a broker, Schwab provides access to other firm's mutual funds (usually subject to transaction fees unless the fund is a part of the no-transaction-fee network).

Schwab index mutual funds

The following table shows Schwab's index mutual funds, with the corresponding Vanguard fund listed for reference.

US Stocks Schwab Vanguard
Total US Market SWTSX 0.03% VTSAX 0.04%
S&P 500 SWPPX 0.02% VFIAX 0.04%
Large-Cap SNXFX 0.05% VLCAX 0.05%
Large-Cap Value SWLVX 0.035% VVIAX 0.05%
Large-Cap Growth SWLGX 0.035% VIGAX 0.05%
Mid-Cap SWMCX 0.04% VIMAX 0.05%
Small-Cap SWSSX 0.04% VSMAX 0.05%
International Stocks Schwab Vanguard
Developed Markets SWISX 0.06% VTMGX 0.07%
Bonds Schwab Vanguard
Total Bond SWAGX 0.04% VBTLX 0.05%
Short-Term Bond SWSBX 0.06% VBIRX 0.07%
Intermediate TIPS SWRSX 0.05% VAIPX
[note 1]		 0.10%
Balanced Schwab Vanguard
Target date SWYOX 0.08% VLXVX 0.15%

Charles Schwab offers access to:

  • Eight index stock mutual funds,[5] with low expense ratios ranging from 2 to 6 basis points.[note 2] The Schwab 1000 (SNXFX) index mutual fund is benchmarked to a proprietary index created by Schwab. The total stock market index is benchmarked to the Dow Jones US Total Stock Market Index.
  • Three indexed bond funds: a total bond market index fund (SWAGX), a short-term aggregate bond fund (SWSBX) and an intermediate TIPS (Treasury Inflation Protected Security) fund (SWRSX).[6]
  • Tax-free bond funds: A national Tax-Free Bond Fund (SWNTX) and the California Tax-Free Bond Fund (SWCAX).[6]
  • Target date index funds with an expense ratio of 8 basis points.[7]

Schwab exchange traded funds

The table below compares ETF offerings from Schwab, SSGA, Vanguard and iShares. All ETFs trade commission-free.

US stock iShares Schwab SPDR Vanguard
Total US market ITOT 0.03% SCHB 0.03% SPTM 0.03% VTI 0.03%
Large-cap ILCB 0.03% SCHX 0.03% SPLG 0.03% VOO 0.03%
Mid-cap IMCB 0.04% SCHM 0.04% SPMD 0.05% VO 0.04%
Small-cap ISCB 0.04% SCHA 0.04% SPSM 0.05% VB 0.05%
Large-cap growth IUSG 0.04% SCHG 0.04% SPYG 0.04% VUG 0.04%
Large-cap value IUSV 0.04% SCHV 0.04% SPYV 0.04% VTV 0.04%
Small-cap growth ISCG 0.06% – – SLYG 0.15% VBK 0.07%
Small-cap value ISCV 0.06% – – SLYV 0.15% VBR 0.07%
Dividend ILCV 0.04% SCHD 0.06% SPYD 0.07% VYM 0.06%
Real estate USRT 0.08% SCHH 0.07% XLRE 0.12% VNQ 0.12%
International stock iShares Schwab SPDR Vanguard
Total international IXUS 0.09% – – – – VXUS 0.08%
International large-cap – – – – CWI 0.30% VEU 0.08%
International small-cap – – – – – – VSS 0.11%
Developed markets IDEV 0.05% – – SPDW 0.04% VEA 0.05%
Emerging markets IEMG 0.11% – – SPEM 0.11% VWO 0.10%
Developed large-cap EFA 0.32% SCHF 0.06% – – – –
Developed small-cap SCZ 0.40% SCHC 0.11% GWX 0.40% – –
Emerging large-cap EEM 0.70% SCHE 0.11% – – – –
Emerging small-cap EEMS 0.71% – – EWX 0.65% – –
Global stock iShares Schwab SPDR Vanguard
Total world stock ACWI 0.32% – – SPGM 0.09% VT 0.08%
US bond iShares Schwab SPDR Vanguard
Total bond AGG 0.04% SCHZ 0.04% SPAB 0.03% BND 0.035%
Short-term treasury SHY 0.15% SCHO 0.05% SPTS 0.06% VGSH 0.05%
Intermediate treasury GOVT 0.05% SCHR 0.05% SPTI 0.06% VGIT 0.05%
Long-Term treasury TLT 0.15% SCHQ 0.05% SPTL 0.06% VGLT 0.05%
Short-term TIPS STIP 0.05% – – – – VTIP 0.05%
Intermediate TIPS TIP 0.19% SCHP 0.05% SPIP 0.12% – –
Short-term aggregate ISTB 0.06% – – – – BSV 0.05%
Intermediate aggregate IMTB 0.06% – – – – BIV 0.05%
Long-term aggregate ILTB 0.06% – – – – BLV 0.05%
International bond iShares Schwab SPDR Vanguard
Total international bond IAGG 0.08% – – – – BNDX 0.08%

Schwab offers a growing selection of low cost ETFs (expense ratios range from 3 to 11 basis points).[8] Schwab manages:

  • US stock market ETFs (broad; large; growth; value; mid; and small) benchmarked to Dow Jones indices, and a US REIT index (Dow Jones sector index).
  • International index ETFs (developed large; developed small; emerging large) benchmarked to FTSE indices.
  • Investment-grade and treasury bond index ETFs (both nominal and TIPS)

International large-cap can be obtained by combining SCHF and SCHE in a 75:25 ratio.[9] The blended ER is 0.0725%, which is lower than the 0.08% of Vanguard's equivalent VEU.

Developed markets can be obtained by combining SCHF and SCHC in a 90:10 ratio.[9] The blended ER is 0.065%, which is higher than the 0.05% of Vanguard's VEA and iShares' IDEV.

Vanguard funds at Schwab

Vanguard mutual funds can be purchased at Schwab's mutual fund supermarket, One Source, with a transaction fee of $49.95 for on-line trades. Vanguard ETFs are more cost efficient, since they can be purchased commission free. Schwab has also eliminated charges for on-line stock trades.[10] Schwab may waive transaction fees for a single mutual fund family (such as Vanguard) if an investor's Schwab account contains sufficient assets to qualify.[11]

Treasury bonds at Schwab

Schwab charges no commissions for on-line treasury bond purchases for both auction purchases and purchases made on the secondary markets. Treasury securities include treasury bills, treasury notes, treasury bonds, and TIPs.[12]

Minimum investment:

  • Treasury Bills, Notes, Bonds, and TIPs - $1,000

Schwab as a bank

Charles Schwab Bank offers checking accounts, mortgages, and lines of credit. See Bogleheads forum topic: "Schwab as a one stop shop".

Notes

  1. ↑ Not an index fund. The admiral share class VAIPX requires a $50,000 minimum investment. There is an investor share class VIPSX with a higher ER of 0.20%, but lower minimum ($3,000).
  2. ↑ A basis point is 1/100th of 1 point (1 percent). 100 bps = 1%.

See also

References

  1. ↑ "Charles Schwab gives date for HQ designation move from San Francisco to DFW". Dallas Business Journal. October 6, 2020. Retrieved July 28, 2023.
  2. ↑ 2.0 2.1 "US SEC: Form 10-K The Charles Schwab Corporation". U.S. Securities and Exchange Commission. Retrieved August 5, 2021.
  3. ↑ "Charles Schwab". Fortune. Retrieved August 5, 2021.
  4. ↑ "Charles Schwab Corporation". Wikipedia. Retrieved August 5, 2021.
  5. ↑ 5.0 5.1 "Schwab Funds® - Index Funds". Charles Schwab. Retrieved July 1, 2021.
  6. ↑ 6.0 6.1 "Schwab Funds® - Bond Funds". Charles Schwab. Retrieved July 1, 2021.
  7. ↑ "Schwab Target Index Funds". Charles Schwab Asset Management. Retrieved July 1, 2021.
  8. ↑ "Schwab Market Cap Index ETFs cost comparisons". Charles Schwab Asset Management. June 1, 2021.
  9. ↑ 9.0 9.1 Morningstar X-Ray, (free) subscription required to access.
  10. ↑ "Charles Schwab is ending commissions on stock trading and the brokerage shares are tanking". CNBC. October 1, 2019.
  11. ↑ Bogleheads forum post: "Re: Schwab Information Thread with FAQ, Links, Tips and Q&A", galawdawg. August 5, 2021
  12. ↑ "Bonds and Fixed Income". Charles Schwab. Retrieved August 5, 2021.
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