best investor experience over the past year compared to other ETFs in their respective categories.
“It’s an honor to be singled out for delivering the best investor experience in four different categories”
Now in their second year, the Morningstar ETF Awards recognize ETFs and ETF providers that have ranked the highest in their category versus peers over the past year based on total cost of ownership and risk-adjusted performance. Total cost of ownership is comprised of estimated holding cost, tracking volatility and market impact cost.
The Schwab U.S. Broad Market ETFTM (SCHB) won the Investor class award out of 17 funds in Morningstar’s “U.S. ETF Large Blend” category. The Schwab Emerging Markets Equity ETFTM (SCHE) was cited as the Investor class winner out of 15 funds in Morningstar’s “U.S. ETF Diversified Emerging Markets” category. The Schwab U.S. Large-Cap Growth ETFTM (SCHG) ranked highest out of 13 funds in the “U.S. ETF Large Growth” category for the Investor class. And the Schwab International Equity ETFTM (SCHF) was the Investor class winner, besting a total of seven funds in the “U.S. ETF Foreign Large Blend” category.
“It’s an honor to be singled out for delivering the best investor experience in four different categories,” said Marie Chandoha, president and CEO of CSIM, which manages $14.28 billion in its 21 proprietary ETFs as of September 30, 2013. “Since the first Schwab ETF launched four years ago next month, we’ve been squarely focused on offering investors well-constructed ETFs at a great value and closely tracking our benchmarks, so it’s gratifying to have an industry leader like Morningstar recognize our efforts.”
Investors can buy or sell Schwab ETFsTM commission-free online through Schwab accounts*. In addition to their Morningstar accolades, the four winning ETFs and 11 other market-cap weighted Schwab ETFs have the lowest operating expense ratios in their respective Lipper categories**. More details about the winners are below:
|Name of ETF||Ticker||Total
|Schwab U.S. Broad Market ETF||SCHB||$2.18B||0.04%||Dow Jones U.S. Broad Stock Market Index|
|Schwab Emerging Markets Equity ETF||SCHE||$811.91M||0.15%||FTSE Emerging Index|
|Schwab U.S. Large-Cap Growth ETF||SCHG||$823.65M||0.07%||Dow Jones U.S. Large-Cap Growth Total Stock Market Index|
|Schwab International Equity ETF||SCHF||$1.46B||0.09%||FTSE Developed ex-US Index|
*Total Assets as of September 26, 2013
The Morningstar ETF Awards
The Morningstar ETF Awards honor ETFs and ETF providers that have best met the expectations of various ETF investors within the context of a relevant peer group over the past year and the longer term. Morningstar recognizes that total cost for an ETF goes beyond expense ratios and uses unique data points for measuring estimated holding cost and liquidity cost. Because investors use ETFs to fulfill different investment strategies, Morningstar awards those ETFs that provide the best investor experience for investors as well as those that are best for traders.
About Charles Schwab Investment Management
Founded in 1989, Charles Schwab Investment Management, Inc. (CSIM), a subsidiary of The Charles Schwab Corporation, is one of the nation’s largest asset management companies with $229 billion in assets under management as of September 30, 2013. It is among the country’s largest money market fund managers and is the third-largest provider of retail index funds. In addition to managing Schwab’s proprietary funds, CSIM provides oversight for the institutional-style, sub-advised Laudus Fund family. CSIM currently manages 76 mutual funds, 22 of which are actively-managed funds, in addition to two separate account model portfolios, and 21 ETF offerings.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can view and download a prospectus by clicking on Prospectuses & Reports. Please read the prospectus carefully before investing.
* Restrictions Apply: Online trades of Schwab ETFs are commission-free at Charles Schwab & Co., Inc. (Member SIPC), while trades of certain third-party ETFs may be subject to commissions. Broker-Assisted and Automated Phone trades are subject to service charges. Waivers may apply. See the Charles Schwab Pricing Guide for details. All ETFs are subject to management fees and expenses. An exchange processing fee applies to sell transactions.
** This claim is based on expense ratio data comparisons between Schwab Market-Cap ETFs and non-Schwab Market-Cap ETFs in their respective Lipper categories. Securities in Market-Cap ETFs are selected and weighted based on the size of their market capitalization. Expense ratio data for non-Schwab Market-Cap ETFs were obtained from Strategic Insight Simfund as of 06/30/13. ETFs in the same Lipper category may track different indexes, have differences in holdings, and show different performance. Competitors may offer more than one ETF in a Lipper category. This claim does not include the Schwab Fundamental Index ETFs which are not market cap-weighted ETFs.
The comparison universe of ETFs is limited by several criteria: Only ETFs with a stated primary prospectus benchmark are considered (active ETFs are excluded). The ETF must have at least three years of performance data by June 30, 2013. The ETF must have tracked the same benchmark and Morningstar must have performance data on that benchmark for at least 13 months. The ETF must have traded on at least 240 out of the last 250 trading days. Exchange-Traded Notes and ETFs from the trading categories (such as Trading-Inverse Equity or Trading-Leveraged Debt) were eliminated from consideration. If there are less than five ETFs with the required data in a Morningstar Category, all ETFs from the category were considered ineligible. Any ETF with less than $100 million in assets at June, 30, 2012, was considered ineligible.
All ETFs are ranked by total cost within the Morningstar Category with lower total costs receiving better ranks. The ETF Total Cost of Ownership is based on an ETF’s estimated holding cost (EHC), tracking volatility (TV), and market impact cost (MI). For the retail awards, an investment amount of $150,000 is invested for a holding period of three years. For the institutional awards, an investment amount of $1,000,000 is invested for a holding period of three weeks, expressed as a fraction of a year. The Blended Morningstar Risk-Adjusted Return rank is factored in equally for both the retail and institutional awards. The rank combines both the one-year and three-year Morningstar Risk-Adjusted Return by placing 25% of the weight on the one-year number and 75% on the three-year number. The weights are designed to place due emphasis on the most recent year given that the awards are annual in nature, but are also meant to reward those funds that have delivered risk-adjusted outperformance over the longer term. All ETFs are ranked by the Blended Morningstar Risk-Adjusted Return within the Morningstar Category with higher returns receiving better ranks. ETFs are again ranked after combining the total cost rank and the Blended Morningstar Risk-Adjusted Return rank with the top-ranked ETF chosen as either the retail Morningstar Category winner or the institutional Morningstar Category winner. Ties are settled by choosing the ETF with the better Blended Morningstar Risk-Adjusted Return rank.
Past performance is no guarantee of future results.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price which may be higher or lower than the net asset value (NAV).
Transactions in shares of the Funds will generate tax consequences and transaction expenses; other account fees may apply. All registered investment companies are obliged to distribute portfolio gains to shareholders at year’s end regardless of performance. The information provided is not intended to be investment or tax advice. Tax consequences vary by individual taxpayer.
Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with The Charles Schwab Corporation or any of its affiliates.
“Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (S&P) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). “FTSE®” is a trade mark owned by the London Stock Exchange plc and is used by FTSE International Limited (“FTSE”) under licence. The FTSE Global Equity Index Series is calculated by FTSE.
The Schwab ETFs are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices, FTSE, or their respective affiliates (together, the “Index Sponsors”) and the Index Sponsors do not make any representation regarding the advisability of trading in the Schwab ETFs. The Index Sponsors do not accept any obligations or liability in relation to the issuance, marketing, operation or trading of the Schwab ETFs.
Neither SIDCO nor CSIM, nor any of their affiliates, are affiliated with the companies listed above.
Alison Wertheim, 415-667-0475