Schwab Introduces Low-Fee Passive TDF Share Class

October 1, 2014 ( – Charles Schwab Bank launched a new share class for the passive Schwab Indexed Retirement Trust Funds (SIRT Funds), featuring a 0.08% expense ratio and a $100 million minimum investment.


Schwab says it expects the low-fee SIRT Fund share class to “have an interesting impact on the competitive landscape for target-date funds [TDFs] within 401(k) plans.” The firm suggests demand for passive investing strategies is increasing among both plan sponsors and participants, and there is especially strong demand for low-cost passive TDF strategies within 401(k)s.

The new SIRT Unit Class II provides large and mid-sized plans a fully passive solution at extraordinary value, Schwab says, contending that the funds are among the lowest priced industry-wide. For smaller plans, SIRT Unit Class I shares are available at 0.14% operating expense ratio and no minimum investment.

The SIRT funds also have a broad asset class diversification, providing exposure to commodities, emerging markets, global real estate investment trusts (REITs), and more.

The SIRT Funds are collective trust funds that have an open architecture design, which Schwab says can address the concerns of sponsors worried about conflicts of interest with all-proprietary approaches. Schwab explains that this type of thinking has accelerated since the Department of Labor published TDF selection tips for plan fiduciaries last year, and identified potential the benefits of low-cost, open-architecture TDFs.

The new SIRT Unit Class II will be available to plans starting December 1.