class=”intro”>In addition to cutting its expense ratios, the firm has made the minimum investment for all of its funds $100. Regardless of investment size, all investors will have the same expense ratio. For instance, the Schwab S&P 500 Index Fund (SWPIX, SWPPX), will move from having the lowest expense ratio of 0.19% and the highest expense ratio of 0.36%, to expense ratios for every share class at 0.09%.
Schwab funds will continue to be distributed with no loads, the company said. For financial advisers, the lowered expense ratio will not make a difference in compensation structure, as advisers receive the same compensation regardless of the fund, said Peter Crawford, senior vice president of Investment Mangement Services at, speaking at a Schwab press event in New York City.
In fact, financial consultants/advisers were in mind with this change, noted Randy Merk, president and CEO of Investment Mangement Services. He said the initiative will give advisers something positive to help “mobilize clients.”
The firm’s motivation for the fee reductions is to stay competitive and keep clients invested for the long-term, Merk said. “If we make our clients happy, they’ll tell a friend,” he said. He emphasized that the changes are permanent and not a promotion.
Last month, Charles Schwab announced changes to its target-date funds, including lower expense ratios and asset allocations that add more exposure to fixed-income beginning 10 years from the target date (see Schwab Makes Target-Fund Enhancements ).
– Ellie Behling
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