Charles Schwab

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

Indexing at Schwab

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

Schwab index mutual funds

Charles Schwab manages eight index stock mutual funds,[2] with low expense ratios ranging from 2 to 6 basis points:[note 1]

Schwab Stock Market Index Funds
Fund Ticker Expense ratio
Schwab Total Market Index Fund SWTSX .03%
Schwab S&P 500 Index Fund SWPPX .02%
Schwab 1000 Index Fund SNXFX .05%
Schwab US Large Cap Value Index Fund SWLVX .035%
Schwab US Large Cap Growth Index Fund SWLGX .035%
Schwab US Mid Cap Index Fund SWMCX .04%
Schwab Small Cap Index Fund SWSSX .04%
Schwab International Index Fund SWISX .06%


The Schwab 1000, Schwab Small Cap, and Schwab International index mutual funds are benchmarked to proprietary benchmarks created by Schwab. The total market index is benchmarked to the Dow Jones Total Market Index.

  • Schwab manages a TIPS (Treasury Inflation Protected Security) fund (SWRSX), three indexed bond funds, a total bond market index fund (SWLBX), a short-term bond fund (SWBDX), intermediate-term bond fund (SWIIX), as well as a GNMA and world bond fund.Expense ratios for the two bond index funds are 4 basis points.[4]
  • Schwab also manages tax-free bond funds: A national Tax-Free Bond Fund (SWNTX) and the California Tax-Free Bond Fund (SWCAX)[5]

Schwab exchange traded funds

Schwab offers a growing selection of low cost ETFs (expense ratios range from 3 to 13 basis points),[6] which can be traded with no commissions at Schwab. Schwab manages intermediate-term investment grade and treasury bond index ETFs (short-term; intermediate term; TIPs), US stock market ETFs (broad; large; growth; value; mid; and small) benchmarked to Dow Jones indices, a US REIT index (Dow Jones sector index) and international index ETFs (developed large; developed small; emerging markets) benchmarked to FTSE indices. The table below provides individual ETF expense ratios.

Expense ratio comparisions[7]
Domestic Equity ETFs Schwab Vanguard iShares
Multi-Cap Core SCHB 0.03% VTI 0.04% ITOT 0.03%
Large-Cap Core SCHX 0.03% VV 0.06% IWB 0.15%
Large-Cap Growth SCHG 0.04% VUG 0.06% IVW 0.18%
Large-Cap Value SCHV 0.04% VTV 0.06% IVE 0.18%
Equity Income SCHD 0.07% VYM 0.08% N/A
Mid-Cap Core SCHM 0.05% VO 0.06% IJH 0.07%
Small-Cap Core SCHA 0.05% VB 0.06% IJR 0.07%
Real Estate SCHH 0.07% VNQ 0.12% USRT 0.08%
Fixed Income ETFs Schwab Vanguard iShares
Core Bond SCHZ 0.04% BND 0.05% AGG 0.05%
Inflation Protected Bond SCHP 0.05% VTIP 0.07% STIP 0.10%
Short Term U.S. Treasury SCHO 0.06% N/A SHY 0.15%
General U.S. Treasury SCHR 0.06% EDV 0.07% IEI 0.15%
International Equity ETFs Schwab Vanguard iShares
International Multi-Cap Core SCHF 0.06% VEA 0.07% IEFA 0.08%
International Small/Mid-Cap Growth SCHC 0.12% VSS 0.13% SCZ 0.40%
Emerging Markets SCHE 0.13% VWO 0.14% IEMG 0.14%

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.[8]

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. [9]

Minimum investment:

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

Notes

  1. A basis point is 1/100th of 1 point (1 percent). 100 bps = 1%.

See also

References

  1. Charles Schwab Corporation, Wikipedia
  2. Schwab equity index strategies
  3. Charles Schwab RAFI fundamental index funds
  4. Schwab bond funds, Charles Schwab, viewed March 19, 2017.
  5. Tax-Free Bond Funds, Charles Schwab, viewed March 19, 2017.
  6. Schwab ETFs
  7. Market Cap Index ETFs, Charles Schwab, viewed March 19, 2017
  8. [1]
  9. Bonds and Fixed Income