Schwab | 4/29/2021
Because… This is the first ETF introduction since October 2019 when Schwab launched three Taxable Bond ETFs. Prior to SCHY, Schwab brought only 25 ETFs to the market since it entered the ETF space in 2009. Schwab ETFs had average assets of $8.8 billion, with the largest fund boasting $27.7 billion at the end of March 2021. Schwab U.S. Dividend Equity ETF, SCHY’s counterpart with the U.S. exposure, had assets of $21.3 billion as of March. Dividend ETFs, which had assets of $124.5 billion, remained the largest factor focus among smart beta ETFs. The group parted with $5.9 billion in 2020 after posting positive sales of $12.5 billion in 2019, according to FUSE Research’s analysis. iShares International Select Dividend ETF is the largest international dividend ETF with assets of $4.3 billion, but its expense ratio of 0.49% is much higher than SCHY’s 0.14%. iShares International Dividend Growth ETF, another international dividend offering from iShares, is priced at 0.15%.
PR Newswire | 4/30/2021
Because… American Funds fell to third place in February among all long-term mutual fund and ETF managers. Although it had $18.1 billion more assets than iShares as of year-end 2020, iShares moved to second place by exceeding American Funds with an additional $5.7 billion at the end of February. American Funds suffered net redemptions of $32.1 billion in 2020, compared with flows of $122.1 billion into iShares and $140.6 billion into Vanguard. In 1Q21, American Funds brought in $10.1 billion, also behind iShares’ $43.5 billion and Vanguard’s $118.7 billion. With assets growing at a slower pace than those of its main rivals, American Funds cannot afford to remain on the ETF sidelines. DFA, another latecomer to the ETF scene, already amassed $1 billion at the end of March since the launch of three ETFs in November and December 2020. American Funds, known as the largest active fund manager, could become a main rival to DFA in the actively managed equity ETF space.
PR Newswire | 5/4/2021
Because… There is no general agreement in the industry as to fee appropriateness because provided services and the quality of services vary from plan to plan. Costs for small plans are typically higher because they are spread over fewer plan participants. Financial firms should make greater efforts to help small plans reduce their costs. First, they could offer benchmarking tools for plan sponsors to evaluate the fee reasonableness. Many small plan sponsors do not know they have been overcharged as they lack the resources to perform the analysis. By comparing against peers in similar-sized plans, they can identify areas for improvement and make their plan more cost-efficient. Second, financial firms can assist plan sponsors with the examination of plan features. Some plans have not fully implemented automatic program features due to the cost concern. Firms could dissect the cost components to a more granular level and help plan sponsors project if any plan design changes can result in long-term benefits, such as employee satisfaction and talent acquisition.